Correlation Between Fubon MSCI and Kao Fong
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Kao Fong 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 Kao Fong 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 Kao Fong Machinery, you can compare the effects of market volatilities on Fubon MSCI and Kao Fong 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 Kao Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Kao Fong.
Diversification Opportunities for Fubon MSCI and Kao Fong
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Kao is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Kao Fong Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kao Fong Machinery 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 Kao Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kao Fong Machinery has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Kao Fong go up and down completely randomly.
Pair Corralation between Fubon MSCI and Kao Fong
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the Kao Fong. But the etf apears to be less risky and, when comparing its historical volatility, Fubon MSCI Taiwan is 4.59 times less risky than Kao Fong. The etf trades about -0.11 of its potential returns per unit of risk. The Kao Fong Machinery is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,165 in Kao Fong Machinery on September 1, 2024 and sell it today you would earn a total of 620.00 from holding Kao Fong Machinery or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Kao Fong Machinery
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Kao Fong Machinery |
Fubon MSCI and Kao Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Kao Fong
The main advantage of trading using opposite Fubon MSCI and Kao Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Kao Fong 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 Kao Fong will offset losses from the drop in Kao Fong's long position.| Fubon MSCI vs. Yuanta Daily Taiwan | Fubon MSCI vs. Yuanta Daily CSI | Fubon MSCI vs. Fubon FTSE Vietnam | Fubon MSCI vs. Fuh Hwa Emerging |
| Kao Fong vs. Airtac International Group | Kao Fong vs. TECO Electric Machinery | Kao Fong vs. Chung Hsin Electric Machinery | Kao Fong vs. King Slide Works |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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