Correlation Between Fubon NASDAQ and Fubon SSE180
Can any of the company-specific risk be diversified away by investing in both Fubon NASDAQ and Fubon SSE180 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 NASDAQ and Fubon SSE180 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon NASDAQ 100 1X and Fubon SSE180 Leveraged, you can compare the effects of market volatilities on Fubon NASDAQ and Fubon SSE180 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 NASDAQ with a short position of Fubon SSE180. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon NASDAQ and Fubon SSE180.
Diversification Opportunities for Fubon NASDAQ and Fubon SSE180
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Fubon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fubon NASDAQ 100 1X and Fubon SSE180 Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon SSE180 Leveraged and Fubon NASDAQ 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 NASDAQ 100 1X are associated (or correlated) with Fubon SSE180. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon SSE180 Leveraged has no effect on the direction of Fubon NASDAQ i.e., Fubon NASDAQ and Fubon SSE180 go up and down completely randomly.
Pair Corralation between Fubon NASDAQ and Fubon SSE180
Assuming the 90 days trading horizon Fubon NASDAQ 100 1X is expected to generate 0.53 times more return on investment than Fubon SSE180. However, Fubon NASDAQ 100 1X is 1.9 times less risky than Fubon SSE180. It trades about -0.07 of its potential returns per unit of risk. Fubon SSE180 Leveraged is currently generating about -0.13 per unit of risk. If you would invest 362.00 in Fubon NASDAQ 100 1X on August 29, 2024 and sell it today you would lose (7.00) from holding Fubon NASDAQ 100 1X or give up 1.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon NASDAQ 100 1X vs. Fubon SSE180 Leveraged
Performance |
| Timeline |
| Fubon NASDAQ 100 |
| Fubon SSE180 Leveraged |
Fubon NASDAQ and Fubon SSE180 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon NASDAQ and Fubon SSE180
The main advantage of trading using opposite Fubon NASDAQ and Fubon SSE180 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon NASDAQ position performs unexpectedly, Fubon SSE180 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 SSE180 will offset losses from the drop in Fubon SSE180's long position.The idea behind Fubon NASDAQ 100 1X and Fubon SSE180 Leveraged pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fubon SSE180 vs. Fubon Hang Seng | Fubon SSE180 vs. Fubon SP Preferred | Fubon SSE180 vs. Fubon NASDAQ 100 1X | Fubon SSE180 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 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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