Correlation Between Fubon MSCI and Kaulin Mfg
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Kaulin Mfg 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 Kaulin Mfg 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 Kaulin Mfg, you can compare the effects of market volatilities on Fubon MSCI and Kaulin Mfg 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 Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Kaulin Mfg.
Diversification Opportunities for Fubon MSCI and Kaulin Mfg
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Kaulin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg 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 Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Kaulin Mfg go up and down completely randomly.
Pair Corralation between Fubon MSCI and Kaulin Mfg
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the Kaulin Mfg. But the etf apears to be less risky and, when comparing its historical volatility, Fubon MSCI Taiwan is 3.7 times less risky than Kaulin Mfg. The etf trades about -0.04 of its potential returns per unit of risk. The Kaulin Mfg is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,475 in Kaulin Mfg on August 25, 2024 and sell it today you would earn a total of 105.00 from holding Kaulin Mfg or generate 7.12% 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. Kaulin Mfg
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Kaulin Mfg |
Fubon MSCI and Kaulin Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Kaulin Mfg
The main advantage of trading using opposite Fubon MSCI and Kaulin Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Kaulin Mfg 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 Kaulin Mfg will offset losses from the drop in Kaulin Mfg'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 |
| Kaulin Mfg vs. Tainan Enterprises Co | Kaulin Mfg vs. Nien Hsing Textile | Kaulin Mfg vs. De Licacy Industrial | Kaulin Mfg vs. Kwong Fong Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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