Correlation Between Fuh Hwa and Fubon NASDAQ
Can any of the company-specific risk be diversified away by investing in both Fuh Hwa and Fubon NASDAQ 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 Fuh Hwa and Fubon NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fuh Hwa FTSE and Fubon NASDAQ 100 2X, you can compare the effects of market volatilities on Fuh Hwa and Fubon NASDAQ 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 Fuh Hwa with a short position of Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuh Hwa and Fubon NASDAQ.
Diversification Opportunities for Fuh Hwa and Fubon NASDAQ
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fuh and Fubon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fuh Hwa FTSE and Fubon NASDAQ 100 2X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon NASDAQ 100 and Fuh Hwa 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 Fuh Hwa FTSE are associated (or correlated) with Fubon NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon NASDAQ 100 has no effect on the direction of Fuh Hwa i.e., Fuh Hwa and Fubon NASDAQ go up and down completely randomly.
Pair Corralation between Fuh Hwa and Fubon NASDAQ
Assuming the 90 days trading horizon Fuh Hwa is expected to generate 18.34 times less return on investment than Fubon NASDAQ. But when comparing it to its historical volatility, Fuh Hwa FTSE is 2.66 times less risky than Fubon NASDAQ. It trades about 0.01 of its potential returns per unit of risk. Fubon NASDAQ 100 2X is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,100 in Fubon NASDAQ 100 2X on September 4, 2024 and sell it today you would earn a total of 4,175 from holding Fubon NASDAQ 100 2X or generate 45.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Fuh Hwa FTSE vs. Fubon NASDAQ 100 2X
Performance |
| Timeline |
| Fuh Hwa FTSE |
| Fubon NASDAQ 100 |
Fuh Hwa and Fubon NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fuh Hwa and Fubon NASDAQ
The main advantage of trading using opposite Fuh Hwa and Fubon NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fuh Hwa position performs unexpectedly, Fubon NASDAQ 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 NASDAQ will offset losses from the drop in Fubon NASDAQ's long position.The idea behind Fuh Hwa FTSE and Fubon NASDAQ 100 2X 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 NASDAQ vs. Fubon Hang Seng | Fubon NASDAQ vs. Fubon SP Preferred | Fubon NASDAQ vs. Fubon NASDAQ 100 1X | Fubon NASDAQ 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |