Correlation Between New Asia and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both New Asia 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 New Asia and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Asia Construction and Fubon Financial Holding, you can compare the effects of market volatilities on New Asia 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 New Asia with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and Fubon Financial.
Diversification Opportunities for New Asia and Fubon Financial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Fubon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction 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 New Asia 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 New Asia Construction 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 New Asia i.e., New Asia and Fubon Financial go up and down completely randomly.
Pair Corralation between New Asia and Fubon Financial
Assuming the 90 days trading horizon New Asia Construction is expected to generate 24.59 times more return on investment than Fubon Financial. However, New Asia is 24.59 times more volatile than Fubon Financial Holding. It trades about 0.1 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.26 per unit of risk. If you would invest 1,320 in New Asia Construction on October 15, 2024 and sell it today you would earn a total of 75.00 from holding New Asia Construction or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Asia Construction vs. Fubon Financial Holding
Performance |
| Timeline |
| New Asia Construction |
| Fubon Financial Holding |
New Asia and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and Fubon Financial
The main advantage of trading using opposite New Asia and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia 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.| New Asia vs. BES Engineering Co | New Asia vs. Delpha Construction Co | New Asia vs. Cathay Real Estate | New Asia vs. Da Cin Construction Co |
| Fubon Financial vs. ReaLy Development Construction | Fubon Financial vs. LandMark Optoelectronics | Fubon Financial vs. Ruentex Engineering Construction | Fubon Financial vs. New Asia Construction |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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