Correlation Between Fubon Hang and Fubon Dow
Can any of the company-specific risk be diversified away by investing in both Fubon Hang and Fubon Dow 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 Hang and Fubon Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon Hang Seng and Fubon Dow Jones, you can compare the effects of market volatilities on Fubon Hang and Fubon Dow 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 Hang with a short position of Fubon Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Hang and Fubon Dow.
Diversification Opportunities for Fubon Hang and Fubon Dow
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fubon and Fubon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Hang Seng and Fubon Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Dow Jones and Fubon Hang 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 Hang Seng are associated (or correlated) with Fubon Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Dow Jones has no effect on the direction of Fubon Hang i.e., Fubon Hang and Fubon Dow go up and down completely randomly.
Pair Corralation between Fubon Hang and Fubon Dow
Assuming the 90 days trading horizon Fubon Hang Seng is expected to under-perform the Fubon Dow. In addition to that, Fubon Hang is 1.72 times more volatile than Fubon Dow Jones. It trades about -0.01 of its total potential returns per unit of risk. Fubon Dow Jones is currently generating about 0.06 per unit of volatility. If you would invest 1,664 in Fubon Dow Jones on September 3, 2024 and sell it today you would earn a total of 520.00 from holding Fubon Dow Jones or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Hang Seng vs. Fubon Dow Jones
Performance |
| Timeline |
| Fubon Hang Seng |
| Fubon Dow Jones |
Fubon Hang and Fubon Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Hang and Fubon Dow
The main advantage of trading using opposite Fubon Hang and Fubon Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Hang position performs unexpectedly, Fubon Dow 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 Dow will offset losses from the drop in Fubon Dow's long position.| Fubon Hang vs. Cathay Taiwan 5G | Fubon Hang vs. Ruentex Development Co | Fubon Hang vs. Symtek Automation Asia | Fubon Hang vs. CTCI Corp |
| Fubon Dow vs. Fubon Hang Seng | Fubon Dow vs. Fubon SP Preferred | Fubon Dow vs. Fubon NASDAQ 100 1X | Fubon Dow vs. Fubon TWSE Corporate |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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