Correlation Between Fubon MSCI and Faraday Technology
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Faraday Technology 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 Faraday Technology 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 Faraday Technology Corp, you can compare the effects of market volatilities on Fubon MSCI and Faraday Technology 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 Faraday Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Faraday Technology.
Diversification Opportunities for Fubon MSCI and Faraday Technology
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fubon and Faraday is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Faraday Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Technology Corp 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 Faraday Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Technology Corp has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Faraday Technology go up and down completely randomly.
Pair Corralation between Fubon MSCI and Faraday Technology
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.56 times more return on investment than Faraday Technology. However, Fubon MSCI Taiwan is 1.8 times less risky than Faraday Technology. It trades about 0.06 of its potential returns per unit of risk. Faraday Technology Corp is currently generating about -0.03 per unit of risk. If you would invest 12,515 in Fubon MSCI Taiwan on November 28, 2024 and sell it today you would earn a total of 1,910 from holding Fubon MSCI Taiwan or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Faraday Technology Corp
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Faraday Technology Corp |
Fubon MSCI and Faraday Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Faraday Technology
The main advantage of trading using opposite Fubon MSCI and Faraday Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Faraday Technology 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 Faraday Technology will offset losses from the drop in Faraday Technology'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 |
| Faraday Technology vs. Global Unichip Corp | Faraday Technology vs. Novatek Microelectronics Corp | Faraday Technology vs. Realtek Semiconductor Corp | Faraday Technology vs. Unimicron Technology Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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