Correlation Between Fubon MSCI and Great Tree
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Great Tree 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 Great Tree 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 Great Tree Pharmacy, you can compare the effects of market volatilities on Fubon MSCI and Great Tree 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 Great Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Great Tree.
Diversification Opportunities for Fubon MSCI and Great Tree
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fubon and Great is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Great Tree Pharmacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Tree Pharmacy 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 Great Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Tree Pharmacy has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Great Tree go up and down completely randomly.
Pair Corralation between Fubon MSCI and Great Tree
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.71 times more return on investment than Great Tree. However, Fubon MSCI Taiwan is 1.4 times less risky than Great Tree. It trades about -0.12 of its potential returns per unit of risk. Great Tree Pharmacy is currently generating about -0.11 per unit of risk. If you would invest 14,155 in Fubon MSCI Taiwan on August 31, 2024 and sell it today you would lose (435.00) from holding Fubon MSCI Taiwan or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Great Tree Pharmacy
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Great Tree Pharmacy |
Fubon MSCI and Great Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Great Tree
The main advantage of trading using opposite Fubon MSCI and Great Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Great Tree 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 Great Tree will offset losses from the drop in Great Tree'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 |
| Great Tree vs. Yulon Finance Corp | Great Tree vs. Chailease Holding Co | Great Tree vs. momo Inc | Great Tree vs. Poya International Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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