Correlation Between Fubon MSCI and ZongTai Real
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and ZongTai Real 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 ZongTai Real 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 ZongTai Real Estate, you can compare the effects of market volatilities on Fubon MSCI and ZongTai Real 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 ZongTai Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and ZongTai Real.
Diversification Opportunities for Fubon MSCI and ZongTai Real
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and ZongTai is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and ZongTai Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZongTai Real Estate 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 ZongTai Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZongTai Real Estate has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and ZongTai Real go up and down completely randomly.
Pair Corralation between Fubon MSCI and ZongTai Real
Assuming the 90 days trading horizon Fubon MSCI is expected to generate 1.28 times less return on investment than ZongTai Real. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 2.42 times less risky than ZongTai Real. It trades about 0.09 of its potential returns per unit of risk. ZongTai Real Estate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,087 in ZongTai Real Estate on November 19, 2024 and sell it today you would earn a total of 1,308 from holding ZongTai Real Estate or generate 62.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. ZongTai Real Estate
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| ZongTai Real Estate |
Fubon MSCI and ZongTai Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and ZongTai Real
The main advantage of trading using opposite Fubon MSCI and ZongTai Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, ZongTai Real 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 ZongTai Real will offset losses from the drop in ZongTai Real'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 |
| ZongTai Real vs. Est Global Apparel | ZongTai Real vs. Kworld Computer Co | ZongTai Real vs. Wonderful Hi Tech Co | ZongTai Real vs. Silicon Power Computer |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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