Correlation Between Fubon FTSE and Fuh Hwa
Can any of the company-specific risk be diversified away by investing in both Fubon FTSE and Fuh Hwa 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 FTSE and Fuh Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon FTSE Vietnam and Fuh Hwa Emerging, you can compare the effects of market volatilities on Fubon FTSE and Fuh Hwa 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 FTSE with a short position of Fuh Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon FTSE and Fuh Hwa.
Diversification Opportunities for Fubon FTSE and Fuh Hwa
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Fuh is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fubon FTSE Vietnam and Fuh Hwa Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa Emerging and Fubon FTSE 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 FTSE Vietnam are associated (or correlated) with Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa Emerging has no effect on the direction of Fubon FTSE i.e., Fubon FTSE and Fuh Hwa go up and down completely randomly.
Pair Corralation between Fubon FTSE and Fuh Hwa
Assuming the 90 days trading horizon Fubon FTSE Vietnam is expected to generate 2.19 times more return on investment than Fuh Hwa. However, Fubon FTSE is 2.19 times more volatile than Fuh Hwa Emerging. It trades about 0.0 of its potential returns per unit of risk. Fuh Hwa Emerging is currently generating about 0.0 per unit of risk. If you would invest 1,160 in Fubon FTSE Vietnam on August 27, 2024 and sell it today you would lose (7.00) from holding Fubon FTSE Vietnam or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon FTSE Vietnam vs. Fuh Hwa Emerging
Performance |
| Timeline |
| Fubon FTSE Vietnam |
| Fuh Hwa Emerging |
Fubon FTSE and Fuh Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon FTSE and Fuh Hwa
The main advantage of trading using opposite Fubon FTSE and Fuh Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon FTSE position performs unexpectedly, Fuh Hwa 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 Fuh Hwa will offset losses from the drop in Fuh Hwa's long position.The idea behind Fubon FTSE Vietnam and Fuh Hwa Emerging 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |