Correlation Between Fubon MSCI and WIN Semiconductors
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and WIN Semiconductors 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 WIN Semiconductors 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 WIN Semiconductors, you can compare the effects of market volatilities on Fubon MSCI and WIN Semiconductors 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 WIN Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and WIN Semiconductors.
Diversification Opportunities for Fubon MSCI and WIN Semiconductors
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and WIN is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and WIN Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIN Semiconductors 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 WIN Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIN Semiconductors has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and WIN Semiconductors go up and down completely randomly.
Pair Corralation between Fubon MSCI and WIN Semiconductors
Assuming the 90 days trading horizon Fubon MSCI is expected to generate 5.14 times less return on investment than WIN Semiconductors. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 2.35 times less risky than WIN Semiconductors. It trades about 0.17 of its potential returns per unit of risk. WIN Semiconductors is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 10,000 in WIN Semiconductors on November 27, 2024 and sell it today you would earn a total of 1,400 from holding WIN Semiconductors or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. WIN Semiconductors
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| WIN Semiconductors |
Fubon MSCI and WIN Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and WIN Semiconductors
The main advantage of trading using opposite Fubon MSCI and WIN Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, WIN Semiconductors 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 WIN Semiconductors will offset losses from the drop in WIN Semiconductors' 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 |
| WIN Semiconductors vs. LARGAN Precision Co | WIN Semiconductors vs. GlobalWafers Co | WIN Semiconductors vs. Novatek Microelectronics Corp | WIN Semiconductors vs. Advanced Wireless Semiconductor |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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