Correlation Between Fubon Taiwan and Taiwan Taomee
Can any of the company-specific risk be diversified away by investing in both Fubon Taiwan and Taiwan Taomee at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fubon Taiwan and Taiwan Taomee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon Taiwan Technology and Taiwan Taomee Co, you can compare the effects of market volatilities on Fubon Taiwan and Taiwan Taomee and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fubon Taiwan with a short position of Taiwan Taomee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Taiwan and Taiwan Taomee.
Diversification Opportunities for Fubon Taiwan and Taiwan Taomee
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fubon and Taiwan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Taiwan Technology and Taiwan Taomee Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Taomee and Fubon Taiwan is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fubon Taiwan Technology are associated (or correlated) with Taiwan Taomee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Taomee has no effect on the direction of Fubon Taiwan i.e., Fubon Taiwan and Taiwan Taomee go up and down completely randomly.
Pair Corralation between Fubon Taiwan and Taiwan Taomee
Assuming the 90 days trading horizon Fubon Taiwan Technology is expected to under-perform the Taiwan Taomee. But the stock apears to be less risky and, when comparing its historical volatility, Fubon Taiwan Technology is 1.02 times less risky than Taiwan Taomee. The stock trades about -0.07 of its potential returns per unit of risk. The Taiwan Taomee Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,060 in Taiwan Taomee Co on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Taiwan Taomee Co or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Taiwan Technology vs. Taiwan Taomee Co
Performance |
| Timeline |
| Fubon Taiwan Technology |
| Taiwan Taomee |
Fubon Taiwan and Taiwan Taomee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Taiwan and Taiwan Taomee
The main advantage of trading using opposite Fubon Taiwan and Taiwan Taomee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Taiwan position performs unexpectedly, Taiwan Taomee can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Taiwan Taomee will offset losses from the drop in Taiwan Taomee's long position.| Fubon Taiwan vs. Taiwan Taomee Co | Fubon Taiwan vs. AP Memory Technology | Fubon Taiwan vs. RichWave Technology Corp | Fubon Taiwan vs. Fitipower Integrated Technology |
| Taiwan Taomee vs. Thermaltake Technology Co | Taiwan Taomee vs. Century Iron And | Taiwan Taomee vs. Sunspring Metal Corp | Taiwan Taomee vs. Air Asia Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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