Correlation Between Fubon MSCI and Leadtek Research
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Leadtek Research 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 Leadtek Research 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 Leadtek Research, you can compare the effects of market volatilities on Fubon MSCI and Leadtek Research 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 Leadtek Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Leadtek Research.
Diversification Opportunities for Fubon MSCI and Leadtek Research
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Leadtek is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Leadtek Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leadtek Research 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 Leadtek Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leadtek Research has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Leadtek Research go up and down completely randomly.
Pair Corralation between Fubon MSCI and Leadtek Research
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.26 times more return on investment than Leadtek Research. However, Fubon MSCI Taiwan is 3.9 times less risky than Leadtek Research. It trades about -0.11 of its potential returns per unit of risk. Leadtek Research is currently generating about -0.21 per unit of risk. If you would invest 14,155 in Fubon MSCI Taiwan on September 1, 2024 and sell it today you would lose (390.00) from holding Fubon MSCI Taiwan or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Leadtek Research
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Leadtek Research |
Fubon MSCI and Leadtek Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Leadtek Research
The main advantage of trading using opposite Fubon MSCI and Leadtek Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Leadtek Research 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 Leadtek Research will offset losses from the drop in Leadtek Research's long position.| Fubon MSCI vs. Yuanta Daily Taiwan | Fubon MSCI vs. Yuanta Daily CSI | Fubon MSCI vs. Fubon FTSE Vietnam | Fubon MSCI vs. Fuh Hwa Emerging |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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