Correlation Between Fubon MSCI and Formosa Sumco
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Formosa Sumco 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 Formosa Sumco 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 Formosa Sumco Technology, you can compare the effects of market volatilities on Fubon MSCI and Formosa Sumco 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 Formosa Sumco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Formosa Sumco.
Diversification Opportunities for Fubon MSCI and Formosa Sumco
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Formosa is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Formosa Sumco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Sumco Technology 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 Formosa Sumco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Sumco Technology has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Formosa Sumco go up and down completely randomly.
Pair Corralation between Fubon MSCI and Formosa Sumco
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.57 times more return on investment than Formosa Sumco. However, Fubon MSCI Taiwan is 1.75 times less risky than Formosa Sumco. It trades about 0.1 of its potential returns per unit of risk. Formosa Sumco Technology is currently generating about -0.23 per unit of risk. If you would invest 14,500 in Fubon MSCI Taiwan on October 25, 2024 and sell it today you would earn a total of 390.00 from holding Fubon MSCI Taiwan or generate 2.69% 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. Formosa Sumco Technology
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Formosa Sumco Technology |
Fubon MSCI and Formosa Sumco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Formosa Sumco
The main advantage of trading using opposite Fubon MSCI and Formosa Sumco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Formosa Sumco 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 Formosa Sumco will offset losses from the drop in Formosa Sumco'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 |
| Formosa Sumco vs. Unimicron Technology Corp | Formosa Sumco vs. Kinsus Interconnect Technology | Formosa Sumco vs. Novatek Microelectronics Corp | Formosa Sumco vs. Delta Electronics |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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