Correlation Between Fubon Financial and Yuanta Financial
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Yuanta 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 Fubon Financial and Yuanta Financial 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 Yuanta Financial Holdings, you can compare the effects of market volatilities on Fubon Financial and Yuanta 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 Fubon Financial with a short position of Yuanta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Yuanta Financial.
Diversification Opportunities for Fubon Financial and Yuanta Financial
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fubon and Yuanta is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Yuanta Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Financial Holdings 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 Yuanta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Financial Holdings has no effect on the direction of Fubon Financial i.e., Fubon Financial and Yuanta Financial go up and down completely randomly.
Pair Corralation between Fubon Financial and Yuanta Financial
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.95 times more return on investment than Yuanta Financial. However, Fubon Financial Holding is 1.05 times less risky than Yuanta Financial. It trades about 0.08 of its potential returns per unit of risk. Yuanta Financial Holdings is currently generating about 0.07 per unit of risk. If you would invest 5,950 in Fubon Financial Holding on November 2, 2024 and sell it today you would earn a total of 3,330 from holding Fubon Financial Holding or generate 55.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Yuanta Financial Holdings
Performance |
| Timeline |
| Fubon Financial Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Yuanta Financial Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Fubon Financial and Yuanta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Yuanta Financial
The main advantage of trading using opposite Fubon Financial and Yuanta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Yuanta 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 Yuanta Financial will offset losses from the drop in Yuanta Financial's long position.The idea behind Fubon Financial Holding and Yuanta Financial Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |