Correlation Between Fubon MSCI and Microbio
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Microbio 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 Microbio 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 Microbio Co, you can compare the effects of market volatilities on Fubon MSCI and Microbio 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 Microbio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Microbio.
Diversification Opportunities for Fubon MSCI and Microbio
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Microbio is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Microbio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbio 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 Microbio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbio has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Microbio go up and down completely randomly.
Pair Corralation between Fubon MSCI and Microbio
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.78 times more return on investment than Microbio. However, Fubon MSCI Taiwan is 1.28 times less risky than Microbio. It trades about 0.0 of its potential returns per unit of risk. Microbio Co is currently generating about -0.07 per unit of risk. If you would invest 13,980 in Fubon MSCI Taiwan on August 28, 2024 and sell it today you would lose (10.00) from holding Fubon MSCI Taiwan or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Microbio Co
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Microbio |
Fubon MSCI and Microbio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Microbio
The main advantage of trading using opposite Fubon MSCI and Microbio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Microbio 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 Microbio will offset losses from the drop in Microbio's long position.The idea behind Fubon MSCI Taiwan and Microbio Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Microbio vs. Uni President Enterprises Corp | Microbio vs. Lien Hwa Industrial | Microbio vs. Great Wall Enterprise | Microbio vs. Standard Foods 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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