Correlation Between Evergreen Steel and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Evergreen Steel 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 Evergreen Steel and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evergreen Steel Corp and Fubon Financial Holding, you can compare the effects of market volatilities on Evergreen Steel 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 Evergreen Steel with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evergreen Steel and Fubon Financial.
Diversification Opportunities for Evergreen Steel and Fubon Financial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evergreen and Fubon is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Evergreen Steel Corp 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 Evergreen Steel 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 Evergreen Steel Corp 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 Evergreen Steel i.e., Evergreen Steel and Fubon Financial go up and down completely randomly.
Pair Corralation between Evergreen Steel and Fubon Financial
Assuming the 90 days trading horizon Evergreen Steel Corp is expected to under-perform the Fubon Financial. In addition to that, Evergreen Steel is 15.26 times more volatile than Fubon Financial Holding. It trades about -0.07 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about -0.07 per unit of volatility. If you would invest 6,320 in Fubon Financial Holding on November 7, 2024 and sell it today you would lose (10.00) from holding Fubon Financial Holding or give up 0.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evergreen Steel Corp vs. Fubon Financial Holding
Performance |
| Timeline |
| Evergreen Steel Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fubon Financial Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Evergreen Steel and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evergreen Steel and Fubon Financial
The main advantage of trading using opposite Evergreen Steel and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evergreen Steel 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.The idea behind Evergreen Steel Corp and Fubon Financial Holding 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |