Correlation Between Fubon MSCI and Hua Eng
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Hua Eng 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 Hua Eng 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 Hua Eng Wire, you can compare the effects of market volatilities on Fubon MSCI and Hua Eng 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 Hua Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Hua Eng.
Diversification Opportunities for Fubon MSCI and Hua Eng
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Hua is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Hua Eng Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Eng Wire 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 Hua Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Eng Wire has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Hua Eng go up and down completely randomly.
Pair Corralation between Fubon MSCI and Hua Eng
Assuming the 90 days trading horizon Fubon MSCI is expected to generate 1.57 times less return on investment than Hua Eng. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 2.15 times less risky than Hua Eng. It trades about 0.09 of its potential returns per unit of risk. Hua Eng Wire is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,425 in Hua Eng Wire on August 30, 2024 and sell it today you would earn a total of 1,480 from holding Hua Eng Wire or generate 103.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Hua Eng Wire
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Hua Eng Wire |
Fubon MSCI and Hua Eng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Hua Eng
The main advantage of trading using opposite Fubon MSCI and Hua Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Hua Eng 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 Hua Eng will offset losses from the drop in Hua Eng'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 |
| Hua Eng vs. Walsin Lihwa Corp | Hua Eng vs. Ta Ya Electric | Hua Eng vs. Hong Tai Electric | Hua Eng vs. Sampo 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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