Correlation Between Fubon Financial and Sesoda Corp
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Sesoda Corp 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 Fubon Financial and Sesoda Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon Financial Holding and Sesoda Corp, you can compare the effects of market volatilities on Fubon Financial and Sesoda Corp 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 Fubon Financial with a short position of Sesoda Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Sesoda Corp.
Diversification Opportunities for Fubon Financial and Sesoda Corp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Sesoda is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Sesoda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sesoda Corp and Fubon Financial 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 Fubon Financial Holding are associated (or correlated) with Sesoda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sesoda Corp has no effect on the direction of Fubon Financial i.e., Fubon Financial and Sesoda Corp go up and down completely randomly.
Pair Corralation between Fubon Financial and Sesoda Corp
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 1.02 times more return on investment than Sesoda Corp. However, Fubon Financial is 1.02 times more volatile than Sesoda Corp. It trades about -0.09 of its potential returns per unit of risk. Sesoda Corp is currently generating about -0.3 per unit of risk. If you would invest 9,160 in Fubon Financial Holding on October 12, 2024 and sell it today you would lose (170.00) from holding Fubon Financial Holding or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Sesoda Corp
Performance |
| Timeline |
| Fubon Financial Holding |
| Sesoda Corp |
Fubon Financial and Sesoda Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Sesoda Corp
The main advantage of trading using opposite Fubon Financial and Sesoda Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Sesoda Corp 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 Sesoda Corp will offset losses from the drop in Sesoda Corp's long position.| Fubon Financial vs. Wei Chuan Foods | Fubon Financial vs. Chernan Metal Industrial | Fubon Financial vs. Asia Metal Industries | Fubon Financial vs. Chunghwa Telecom Co |
| Sesoda Corp vs. Taiwan Fertilizer Co | Sesoda Corp vs. Sinon Corp | Sesoda Corp vs. Eternal Materials Co | Sesoda Corp vs. Oriental Union Chemical |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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