Correlation Between Fubon MSCI and Cathay Koreataiwan
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Cathay Koreataiwan 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 MSCI and Cathay Koreataiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon MSCI Taiwan and Cathay Koreataiwan IT, you can compare the effects of market volatilities on Fubon MSCI and Cathay Koreataiwan 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 MSCI with a short position of Cathay Koreataiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Cathay Koreataiwan.
Diversification Opportunities for Fubon MSCI and Cathay Koreataiwan
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Cathay is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Cathay Koreataiwan IT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Koreataiwan and Fubon MSCI 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 MSCI Taiwan are associated (or correlated) with Cathay Koreataiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Koreataiwan has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Cathay Koreataiwan go up and down completely randomly.
Pair Corralation between Fubon MSCI and Cathay Koreataiwan
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.91 times more return on investment than Cathay Koreataiwan. However, Fubon MSCI Taiwan is 1.1 times less risky than Cathay Koreataiwan. It trades about 0.1 of its potential returns per unit of risk. Cathay Koreataiwan IT is currently generating about 0.04 per unit of risk. If you would invest 8,225 in Fubon MSCI Taiwan on September 3, 2024 and sell it today you would earn a total of 5,540 from holding Fubon MSCI Taiwan or generate 67.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Cathay Koreataiwan IT
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Cathay Koreataiwan |
Fubon MSCI and Cathay Koreataiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Cathay Koreataiwan
The main advantage of trading using opposite Fubon MSCI and Cathay Koreataiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Cathay Koreataiwan 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 Cathay Koreataiwan will offset losses from the drop in Cathay Koreataiwan's long position.| Fubon MSCI vs. Cathay Taiwan 5G | Fubon MSCI vs. Ruentex Development Co | Fubon MSCI vs. Symtek Automation Asia | Fubon MSCI vs. CTCI Corp |
| Cathay Koreataiwan vs. Cathay TIP TAIEX | Cathay Koreataiwan vs. Cathay Nasdaq AI | Cathay Koreataiwan vs. Cathay Dow Jones | Cathay Koreataiwan vs. Cathay Bloomberg Barclays |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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