Correlation Between Fubon MSCI and First Steamship
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and First Steamship 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 First Steamship 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 First Steamship Co, you can compare the effects of market volatilities on Fubon MSCI and First Steamship 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 First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and First Steamship.
Diversification Opportunities for Fubon MSCI and First Steamship
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and First is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and First Steamship Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Steamship 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 First Steamship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Steamship has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and First Steamship go up and down completely randomly.
Pair Corralation between Fubon MSCI and First Steamship
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.85 times more return on investment than First Steamship. However, Fubon MSCI Taiwan is 1.18 times less risky than First Steamship. It trades about 0.1 of its potential returns per unit of risk. First Steamship Co is currently generating about -0.01 per unit of risk. If you would invest 9,445 in Fubon MSCI Taiwan on August 26, 2024 and sell it today you would earn a total of 4,730 from holding Fubon MSCI Taiwan or generate 50.08% 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. First Steamship Co
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| First Steamship |
Fubon MSCI and First Steamship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and First Steamship
The main advantage of trading using opposite Fubon MSCI and First Steamship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, First Steamship 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 First Steamship will offset losses from the drop in First Steamship'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 |
| First Steamship vs. Sincere Navigation Corp | First Steamship vs. Evergreen International Storage | First Steamship vs. Far Eastern Department | First Steamship vs. Hung Sheng Construction |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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