Correlation Between Louisa Professional and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Louisa Professional 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 Louisa Professional and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Louisa Professional Coffee and Fubon Financial Holding, you can compare the effects of market volatilities on Louisa Professional 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 Louisa Professional with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Louisa Professional and Fubon Financial.
Diversification Opportunities for Louisa Professional and Fubon Financial
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Louisa and Fubon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Louisa Professional Coffee 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 Louisa Professional 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 Louisa Professional Coffee 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 Louisa Professional i.e., Louisa Professional and Fubon Financial go up and down completely randomly.
Pair Corralation between Louisa Professional and Fubon Financial
Assuming the 90 days trading horizon Louisa Professional Coffee is expected to under-perform the Fubon Financial. In addition to that, Louisa Professional is 1.23 times more volatile than Fubon Financial Holding. It trades about -0.36 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about -0.06 per unit of volatility. If you would invest 9,230 in Fubon Financial Holding on September 5, 2024 and sell it today you would lose (140.00) from holding Fubon Financial Holding or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Louisa Professional Coffee vs. Fubon Financial Holding
Performance |
| Timeline |
| Louisa Professional |
| Fubon Financial Holding |
Louisa Professional and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Louisa Professional and Fubon Financial
The main advantage of trading using opposite Louisa Professional and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Louisa Professional 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.| Louisa Professional vs. Ruentex Development Co | Louisa Professional vs. Symtek Automation Asia | Louisa Professional vs. CTCI Corp | Louisa Professional vs. Information Technology Total |
| Fubon Financial vs. Louisa Professional Coffee | Fubon Financial vs. Baotek Industrial Materials | Fubon Financial vs. X Legend Entertainment Co | Fubon Financial vs. Gamania Digital Entertainment |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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