Correlation Between Fubon MSCI and China Petrochemical
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and China Petrochemical 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 China Petrochemical 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 China Petrochemical Development, you can compare the effects of market volatilities on Fubon MSCI and China Petrochemical 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 China Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and China Petrochemical.
Diversification Opportunities for Fubon MSCI and China Petrochemical
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and China is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and China Petrochemical Developmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petrochemical 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 China Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petrochemical has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and China Petrochemical go up and down completely randomly.
Pair Corralation between Fubon MSCI and China Petrochemical
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.76 times more return on investment than China Petrochemical. However, Fubon MSCI Taiwan is 1.31 times less risky than China Petrochemical. It trades about 0.07 of its potential returns per unit of risk. China Petrochemical Development is currently generating about -0.2 per unit of risk. If you would invest 13,430 in Fubon MSCI Taiwan on August 25, 2024 and sell it today you would earn a total of 745.00 from holding Fubon MSCI Taiwan or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. China Petrochemical Developmen
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| China Petrochemical |
Fubon MSCI and China Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and China Petrochemical
The main advantage of trading using opposite Fubon MSCI and China Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, China Petrochemical 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 Petrochemical will offset losses from the drop in China Petrochemical's long position.| Fubon MSCI vs. Fubon Hang Seng | Fubon MSCI vs. Fubon SP Preferred | Fubon MSCI vs. Fubon NASDAQ 100 1X | Fubon MSCI vs. Fubon TWSE Corporate |
| China Petrochemical vs. USI Corp | China Petrochemical vs. Grand Pacific Petrochemical | China Petrochemical vs. Taiwan Styrene Monomer | China Petrochemical vs. China Steel 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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