Correlation Between Fubon MSCI and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Fubon Financial 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 Fubon Financial 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 Fubon Financial Holding, you can compare the effects of market volatilities on Fubon MSCI and Fubon Financial 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 Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Fubon Financial.
Diversification Opportunities for Fubon MSCI and Fubon Financial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Fubon is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding 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 Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Fubon Financial go up and down completely randomly.
Pair Corralation between Fubon MSCI and Fubon Financial
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 2.56 times more return on investment than Fubon Financial. However, Fubon MSCI is 2.56 times more volatile than Fubon Financial Holding. It trades about 0.05 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.0 per unit of risk. If you would invest 12,515 in Fubon MSCI Taiwan on August 30, 2024 and sell it today you would earn a total of 1,205 from holding Fubon MSCI Taiwan or generate 9.63% 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. Fubon Financial Holding
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Fubon Financial Holding |
Fubon MSCI and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Fubon Financial
The main advantage of trading using opposite Fubon MSCI and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Fubon Financial 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 Fubon Financial will offset losses from the drop in Fubon Financial's long position.| Fubon MSCI vs. Symtek Automation Asia | Fubon MSCI vs. CTCI Corp | Fubon MSCI vs. Information Technology Total | Fubon MSCI vs. Kinko Optical Co |
| Fubon Financial vs. Far EasTone Telecommunications | Fubon Financial vs. Syscom Computer Engineering | Fubon Financial vs. Emerging Display Technologies | Fubon Financial vs. Taiwan Chinsan Electronic |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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