Correlation Between Fubon MSCI and Hotai Finance
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Hotai Finance 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 Hotai Finance 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 Hotai Finance Corp, you can compare the effects of market volatilities on Fubon MSCI and Hotai Finance 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 Hotai Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Hotai Finance.
Diversification Opportunities for Fubon MSCI and Hotai Finance
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Hotai is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Hotai Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Finance Corp 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 Hotai Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Finance Corp has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Hotai Finance go up and down completely randomly.
Pair Corralation between Fubon MSCI and Hotai Finance
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 0.98 times more return on investment than Hotai Finance. However, Fubon MSCI Taiwan is 1.02 times less risky than Hotai Finance. It trades about -0.15 of its potential returns per unit of risk. Hotai Finance Corp is currently generating about -0.37 per unit of risk. If you would invest 14,445 in Fubon MSCI Taiwan on August 24, 2024 and sell it today you would lose (545.00) from holding Fubon MSCI Taiwan or give up 3.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Hotai Finance Corp
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Hotai Finance Corp |
Fubon MSCI and Hotai Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Hotai Finance
The main advantage of trading using opposite Fubon MSCI and Hotai Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Hotai Finance 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 Hotai Finance will offset losses from the drop in Hotai Finance'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 |
| Hotai Finance vs. Chailease Holding Co | Hotai Finance vs. Yulon Finance Corp | Hotai Finance vs. Pou Chen Corp | Hotai Finance vs. Ruentex Industries |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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