Correlation Between Fubon Taiwan and PlayNitride
Can any of the company-specific risk be diversified away by investing in both Fubon Taiwan and PlayNitride 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 PlayNitride 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 PlayNitride, you can compare the effects of market volatilities on Fubon Taiwan and PlayNitride 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 PlayNitride. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Taiwan and PlayNitride.
Diversification Opportunities for Fubon Taiwan and PlayNitride
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fubon and PlayNitride is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Taiwan Technology and PlayNitride in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayNitride 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 PlayNitride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayNitride has no effect on the direction of Fubon Taiwan i.e., Fubon Taiwan and PlayNitride go up and down completely randomly.
Pair Corralation between Fubon Taiwan and PlayNitride
Assuming the 90 days trading horizon Fubon Taiwan is expected to generate 15.67 times less return on investment than PlayNitride. But when comparing it to its historical volatility, Fubon Taiwan Technology is 3.12 times less risky than PlayNitride. It trades about 0.05 of its potential returns per unit of risk. PlayNitride is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 7,450 in PlayNitride on September 2, 2024 and sell it today you would earn a total of 6,600 from holding PlayNitride or generate 88.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Taiwan Technology vs. PlayNitride
Performance |
| Timeline |
| Fubon Taiwan Technology |
| PlayNitride |
Fubon Taiwan and PlayNitride Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Taiwan and PlayNitride
The main advantage of trading using opposite Fubon Taiwan and PlayNitride positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Taiwan position performs unexpectedly, PlayNitride 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 PlayNitride will offset losses from the drop in PlayNitride'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 |
| PlayNitride vs. Taiwan Semiconductor Manufacturing | PlayNitride vs. Hon Hai Precision | PlayNitride vs. MediaTek | PlayNitride vs. Chunghwa Telecom 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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