Correlation Between Fubon NASDAQ and Fubon Hang
Can any of the company-specific risk be diversified away by investing in both Fubon NASDAQ and Fubon Hang 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 Hang 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 Hang Seng, you can compare the effects of market volatilities on Fubon NASDAQ and Fubon Hang 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 Hang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon NASDAQ and Fubon Hang.
Diversification Opportunities for Fubon NASDAQ and Fubon Hang
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fubon and Fubon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fubon NASDAQ 100 1X and Fubon Hang Seng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Hang Seng 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 Hang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Hang Seng has no effect on the direction of Fubon NASDAQ i.e., Fubon NASDAQ and Fubon Hang go up and down completely randomly.
Pair Corralation between Fubon NASDAQ and Fubon Hang
Assuming the 90 days trading horizon Fubon NASDAQ 100 1X is expected to under-perform the Fubon Hang. But the etf apears to be less risky and, when comparing its historical volatility, Fubon NASDAQ 100 1X is 1.35 times less risky than Fubon Hang. The etf trades about -0.15 of its potential returns per unit of risk. The Fubon Hang Seng is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,243 in Fubon Hang Seng on November 3, 2024 and sell it today you would lose (15.00) from holding Fubon Hang Seng or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon NASDAQ 100 1X vs. Fubon Hang Seng
Performance |
| Timeline |
| Fubon NASDAQ 100 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fubon Hang Seng |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Fubon NASDAQ and Fubon Hang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon NASDAQ and Fubon Hang
The main advantage of trading using opposite Fubon NASDAQ and Fubon Hang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon NASDAQ position performs unexpectedly, Fubon Hang 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 Hang will offset losses from the drop in Fubon Hang's long position.The idea behind Fubon NASDAQ 100 1X and Fubon Hang Seng 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.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |