Correlation Between Fubon MSCI and San Fang
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and San Fang 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 San Fang 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 San Fang Chemical, you can compare the effects of market volatilities on Fubon MSCI and San Fang 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 San Fang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and San Fang.
Diversification Opportunities for Fubon MSCI and San Fang
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and San is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and San Fang Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fang Chemical 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 San Fang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fang Chemical has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and San Fang go up and down completely randomly.
Pair Corralation between Fubon MSCI and San Fang
Assuming the 90 days trading horizon Fubon MSCI is expected to generate 1.38 times less return on investment than San Fang. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 1.69 times less risky than San Fang. It trades about 0.1 of its potential returns per unit of risk. San Fang Chemical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,085 in San Fang Chemical on September 3, 2024 and sell it today you would earn a total of 1,935 from holding San Fang Chemical or generate 92.81% 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. San Fang Chemical
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| San Fang Chemical |
Fubon MSCI and San Fang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and San Fang
The main advantage of trading using opposite Fubon MSCI and San Fang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, San Fang 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 San Fang will offset losses from the drop in San Fang'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 |
| San Fang vs. Asia Polymer Corp | San Fang vs. Taiwan Styrene Monomer | San Fang vs. UPC Technology Corp | San Fang vs. USI Corp |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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