Correlation Between Tehmag Foods and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Tehmag Foods and Fubon Financial 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 Tehmag Foods and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tehmag Foods and Fubon Financial Holding, you can compare the effects of market volatilities on Tehmag Foods and Fubon Financial 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 Tehmag Foods with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tehmag Foods and Fubon Financial.
Diversification Opportunities for Tehmag Foods and Fubon Financial
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Tehmag and Fubon is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tehmag Foods and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding and Tehmag Foods 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 Tehmag Foods are associated (or correlated) with Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Tehmag Foods i.e., Tehmag Foods and Fubon Financial go up and down completely randomly.
Pair Corralation between Tehmag Foods and Fubon Financial
Assuming the 90 days trading horizon Tehmag Foods is expected to under-perform the Fubon Financial. In addition to that, Tehmag Foods is 4.01 times more volatile than Fubon Financial Holding. It trades about -0.08 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.31 per unit of volatility. If you would invest 6,250 in Fubon Financial Holding on September 4, 2024 and sell it today you would earn a total of 40.00 from holding Fubon Financial Holding or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tehmag Foods vs. Fubon Financial Holding
Performance |
| Timeline |
| Tehmag Foods |
| Fubon Financial Holding |
Tehmag Foods and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tehmag Foods and Fubon Financial
The main advantage of trading using opposite Tehmag Foods and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tehmag Foods position performs unexpectedly, Fubon Financial 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 Financial will offset losses from the drop in Fubon Financial's long position.| Tehmag Foods vs. Uni President Enterprises Corp | Tehmag Foods vs. Lien Hwa Industrial | Tehmag Foods vs. Great Wall Enterprise | Tehmag Foods vs. Standard Foods Corp |
| Fubon Financial vs. Chinese Maritime Transport | Fubon Financial vs. Grand Ocean Retail | Fubon Financial vs. Niko Semiconductor Co | Fubon Financial vs. Vanguard International Semiconductor |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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