Correlation Between Tex Ray and Fubon Taiwan
Can any of the company-specific risk be diversified away by investing in both Tex Ray and Fubon Taiwan 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 Tex Ray and Fubon Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tex Ray Industrial Co and Fubon Taiwan Technology, you can compare the effects of market volatilities on Tex Ray and Fubon Taiwan 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 Tex Ray with a short position of Fubon Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Ray and Fubon Taiwan.
Diversification Opportunities for Tex Ray and Fubon Taiwan
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tex and Fubon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co and Fubon Taiwan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Taiwan Technology and Tex Ray 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 Tex Ray Industrial Co are associated (or correlated) with Fubon Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Taiwan Technology has no effect on the direction of Tex Ray i.e., Tex Ray and Fubon Taiwan go up and down completely randomly.
Pair Corralation between Tex Ray and Fubon Taiwan
Assuming the 90 days trading horizon Tex Ray is expected to generate 1.86 times less return on investment than Fubon Taiwan. But when comparing it to its historical volatility, Tex Ray Industrial Co is 1.12 times less risky than Fubon Taiwan. It trades about 0.07 of its potential returns per unit of risk. Fubon Taiwan Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 17,390 in Fubon Taiwan Technology on September 12, 2024 and sell it today you would earn a total of 1,565 from holding Fubon Taiwan Technology or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tex Ray Industrial Co vs. Fubon Taiwan Technology
Performance |
| Timeline |
| Tex Ray Industrial |
| Fubon Taiwan Technology |
Tex Ray and Fubon Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tex Ray and Fubon Taiwan
The main advantage of trading using opposite Tex Ray and Fubon Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Ray position performs unexpectedly, Fubon Taiwan 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 Taiwan will offset losses from the drop in Fubon Taiwan's long position.| Tex Ray vs. Feng Tay Enterprises | Tex Ray vs. Ruentex Development Co | Tex Ray vs. WiseChip Semiconductor | Tex Ray vs. Novatek Microelectronics Corp |
| Fubon Taiwan vs. Iron Force Industrial | Fubon Taiwan vs. Adata Technology Co | Fubon Taiwan vs. Mayer Steel Pipe | Fubon Taiwan vs. Evergreen International Storage |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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