Correlation Between First Insurance and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both First Insurance 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 First Insurance and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Insurance Co and Fubon Financial Holding, you can compare the effects of market volatilities on First Insurance 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 First Insurance with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Fubon Financial.
Diversification Opportunities for First Insurance and Fubon Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Fubon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance Co 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 First Insurance 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 First Insurance Co 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 First Insurance i.e., First Insurance and Fubon Financial go up and down completely randomly.
Pair Corralation between First Insurance and Fubon Financial
Assuming the 90 days trading horizon First Insurance Co is expected to generate 0.98 times more return on investment than Fubon Financial. However, First Insurance Co is 1.02 times less risky than Fubon Financial. It trades about 0.17 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.02 per unit of risk. If you would invest 2,300 in First Insurance Co on October 26, 2024 and sell it today you would earn a total of 230.00 from holding First Insurance Co or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Fubon Financial Holding
Performance |
| Timeline |
| First Insurance |
| Fubon Financial Holding |
First Insurance and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Fubon Financial
The main advantage of trading using opposite First Insurance and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance 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.| First Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
| Fubon Financial vs. Emerging Display Technologies | Fubon Financial vs. Chinese Gamer International | Fubon Financial vs. Mosa Industrial Corp | Fubon Financial vs. Yi Jinn Industrial |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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