Correlation Between Fubon MSCI and Lien Chang
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Lien Chang 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 Lien Chang 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 Lien Chang Electronic, you can compare the effects of market volatilities on Fubon MSCI and Lien Chang 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 Lien Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Lien Chang.
Diversification Opportunities for Fubon MSCI and Lien Chang
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Lien is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Lien Chang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Chang Electronic 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 Lien Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Chang Electronic has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Lien Chang go up and down completely randomly.
Pair Corralation between Fubon MSCI and Lien Chang
Assuming the 90 days trading horizon Fubon MSCI is expected to generate 2.11 times less return on investment than Lien Chang. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 2.15 times less risky than Lien Chang. It trades about 0.07 of its potential returns per unit of risk. Lien Chang Electronic is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,365 in Lien Chang Electronic on October 23, 2024 and sell it today you would earn a total of 45.00 from holding Lien Chang Electronic or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Lien Chang Electronic
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Lien Chang Electronic |
Fubon MSCI and Lien Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Lien Chang
The main advantage of trading using opposite Fubon MSCI and Lien Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Lien Chang 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 Lien Chang will offset losses from the drop in Lien Chang'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 |
| Lien Chang vs. Hitron Technologies | Lien Chang vs. Universal Microelectronics Co | Lien Chang vs. Pan International Industrial Corp | Lien Chang vs. Sunonwealth Electric Machine |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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