Correlation Between Hua Nan and IBF Financial
Can any of the company-specific risk be diversified away by investing in both Hua Nan and IBF 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 Hua Nan and IBF Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hua Nan Financial and IBF Financial Holdings, you can compare the effects of market volatilities on Hua Nan and IBF 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 Hua Nan with a short position of IBF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Nan and IBF Financial.
Diversification Opportunities for Hua Nan and IBF Financial
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hua and IBF is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hua Nan Financial and IBF Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBF Financial Holdings and Hua Nan 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 Hua Nan Financial are associated (or correlated) with IBF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBF Financial Holdings has no effect on the direction of Hua Nan i.e., Hua Nan and IBF Financial go up and down completely randomly.
Pair Corralation between Hua Nan and IBF Financial
Assuming the 90 days trading horizon Hua Nan Financial is expected to generate 0.58 times more return on investment than IBF Financial. However, Hua Nan Financial is 1.72 times less risky than IBF Financial. It trades about 0.02 of its potential returns per unit of risk. IBF Financial Holdings is currently generating about -0.18 per unit of risk. If you would invest 2,545 in Hua Nan Financial on August 26, 2024 and sell it today you would earn a total of 5.00 from holding Hua Nan Financial or generate 0.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Nan Financial vs. IBF Financial Holdings
Performance |
| Timeline |
| Hua Nan Financial |
| IBF Financial Holdings |
Hua Nan and IBF Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Nan and IBF Financial
The main advantage of trading using opposite Hua Nan and IBF Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Nan position performs unexpectedly, IBF 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 IBF Financial will offset losses from the drop in IBF Financial's long position.| Hua Nan vs. First Financial Holding | Hua Nan vs. Mega Financial Holding | Hua Nan vs. CTBC Financial Holding | Hua Nan vs. ESUN Financial Holding |
| IBF Financial vs. Farglory FTZ Investment | IBF Financial vs. Chailease Holding Co | IBF Financial vs. FarGlory Hotel Co | IBF Financial vs. First Hotel Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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