Correlation Between Fubon NIFTY and Fubon Taiwan
Can any of the company-specific risk be diversified away by investing in both Fubon NIFTY and Fubon Taiwan 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 NIFTY and Fubon Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon NIFTY and Fubon Taiwan Technology, you can compare the effects of market volatilities on Fubon NIFTY and Fubon Taiwan 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 NIFTY with a short position of Fubon Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon NIFTY and Fubon Taiwan.
Diversification Opportunities for Fubon NIFTY and Fubon Taiwan
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Fubon is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fubon NIFTY and Fubon Taiwan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Taiwan Technology and Fubon NIFTY 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 NIFTY are associated (or correlated) with Fubon Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Taiwan Technology has no effect on the direction of Fubon NIFTY i.e., Fubon NIFTY and Fubon Taiwan go up and down completely randomly.
Pair Corralation between Fubon NIFTY and Fubon Taiwan
Assuming the 90 days trading horizon Fubon NIFTY is expected to generate 2.83 times less return on investment than Fubon Taiwan. But when comparing it to its historical volatility, Fubon NIFTY is 1.91 times less risky than Fubon Taiwan. It trades about 0.07 of its potential returns per unit of risk. Fubon Taiwan Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 10,620 in Fubon Taiwan Technology on October 10, 2024 and sell it today you would earn a total of 9,750 from holding Fubon Taiwan Technology or generate 91.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon NIFTY vs. Fubon Taiwan Technology
Performance |
| Timeline |
| Fubon NIFTY |
| Fubon Taiwan Technology |
Fubon NIFTY and Fubon Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon NIFTY and Fubon Taiwan
The main advantage of trading using opposite Fubon NIFTY and Fubon Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon NIFTY position performs unexpectedly, Fubon Taiwan 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 Fubon Taiwan will offset losses from the drop in Fubon Taiwan's long position.| Fubon NIFTY vs. Fubon Hang Seng | Fubon NIFTY vs. Fubon SP Preferred | Fubon NIFTY vs. Fubon NASDAQ 100 1X | Fubon NIFTY vs. Fubon TWSE Corporate |
| Fubon Taiwan vs. Fubon NIFTY | Fubon Taiwan vs. eCloudvalley Digital Technology | Fubon Taiwan vs. Logah Technology Corp | Fubon Taiwan vs. Advanced Wireless Semiconductor |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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