Correlation Between Iron Force and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Iron Force 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 Iron Force and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Force Industrial and Fubon Financial Holding, you can compare the effects of market volatilities on Iron Force 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 Iron Force with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Force and Fubon Financial.
Diversification Opportunities for Iron Force and Fubon Financial
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iron and Fubon is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Iron Force Industrial 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 Iron Force 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 Iron Force Industrial 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 Iron Force i.e., Iron Force and Fubon Financial go up and down completely randomly.
Pair Corralation between Iron Force and Fubon Financial
Assuming the 90 days trading horizon Iron Force Industrial is expected to under-perform the Fubon Financial. In addition to that, Iron Force is 1.43 times more volatile than Fubon Financial Holding. It trades about -0.19 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about -0.08 per unit of volatility. If you would invest 9,190 in Fubon Financial Holding on August 29, 2024 and sell it today you would lose (180.00) from holding Fubon Financial Holding or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Force Industrial vs. Fubon Financial Holding
Performance |
| Timeline |
| Iron Force Industrial |
| Fubon Financial Holding |
Iron Force and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Force and Fubon Financial
The main advantage of trading using opposite Iron Force and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Force 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.| Iron Force vs. Hota Industrial Mfg | Iron Force vs. BizLink Holding | Iron Force vs. Cub Elecparts | Iron Force vs. Hu Lane Associate |
| Fubon Financial vs. Taiwan Secom Co | Fubon Financial vs. TTET Union Corp | Fubon Financial vs. China Steel Chemical | Fubon Financial vs. Taiwan Shin Kong |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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