Correlation Between Fubon MSCI and Century Wind
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Century Wind 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 Century Wind 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 Century Wind Power, you can compare the effects of market volatilities on Fubon MSCI and Century Wind 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 Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Century Wind.
Diversification Opportunities for Fubon MSCI and Century Wind
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Century is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power 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 Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Century Wind go up and down completely randomly.
Pair Corralation between Fubon MSCI and Century Wind
Assuming the 90 days trading horizon Fubon MSCI is expected to generate 1.79 times less return on investment than Century Wind. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 2.13 times less risky than Century Wind. It trades about 0.1 of its potential returns per unit of risk. Century Wind Power is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14,457 in Century Wind Power on August 31, 2024 and sell it today you would earn a total of 15,793 from holding Century Wind Power or generate 109.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Century Wind Power
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Century Wind Power |
Fubon MSCI and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Century Wind
The main advantage of trading using opposite Fubon MSCI and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind'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 |
| Century Wind vs. TWOWAY Communications | Century Wind vs. Hotel Holiday Garden | Century Wind vs. FarGlory Hotel Co | Century Wind vs. Tait Marketing Distribution |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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