Correlation Between Fubon Taiwan and China Times
Can any of the company-specific risk be diversified away by investing in both Fubon Taiwan and China Times 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 China Times 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 China Times Publishing, you can compare the effects of market volatilities on Fubon Taiwan and China Times 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 China Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Taiwan and China Times.
Diversification Opportunities for Fubon Taiwan and China Times
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fubon and China is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Taiwan Technology and China Times Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Times Publishing 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 China Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Times Publishing has no effect on the direction of Fubon Taiwan i.e., Fubon Taiwan and China Times go up and down completely randomly.
Pair Corralation between Fubon Taiwan and China Times
Assuming the 90 days trading horizon Fubon Taiwan Technology is expected to under-perform the China Times. But the stock apears to be less risky and, when comparing its historical volatility, Fubon Taiwan Technology is 2.27 times less risky than China Times. The stock trades about -0.12 of its potential returns per unit of risk. The China Times Publishing is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,900 in China Times Publishing on August 31, 2024 and sell it today you would lose (45.00) from holding China Times Publishing or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Taiwan Technology vs. China Times Publishing
Performance |
| Timeline |
| Fubon Taiwan Technology |
| China Times Publishing |
Fubon Taiwan and China Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Taiwan and China Times
The main advantage of trading using opposite Fubon Taiwan and China Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Taiwan position performs unexpectedly, China Times 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 China Times will offset losses from the drop in China Times' long position.| Fubon Taiwan vs. Sunfar Computer Co | Fubon Taiwan vs. Silicon Power Computer | Fubon Taiwan vs. FDC International Hotels | Fubon Taiwan vs. Taiwan Speciality Chemicals |
| China Times vs. Fubon MSCI Taiwan | China Times vs. YuantaP shares Taiwan Electronics | China Times vs. YuantaP shares Taiwan Mid Cap | China Times vs. YuantaP shares Taiwan Top |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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