Correlation Between Fubon Financial and Taiwan Mobile
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Taiwan Mobile 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 Taiwan Mobile 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 Taiwan Mobile Co, you can compare the effects of market volatilities on Fubon Financial and Taiwan Mobile 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 Taiwan Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Taiwan Mobile.
Diversification Opportunities for Fubon Financial and Taiwan Mobile
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Taiwan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Taiwan Mobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Mobile 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 Taiwan Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Mobile has no effect on the direction of Fubon Financial i.e., Fubon Financial and Taiwan Mobile go up and down completely randomly.
Pair Corralation between Fubon Financial and Taiwan Mobile
Assuming the 90 days trading horizon Fubon Financial Holding is expected to under-perform the Taiwan Mobile. But the stock apears to be less risky and, when comparing its historical volatility, Fubon Financial Holding is 1.15 times less risky than Taiwan Mobile. The stock trades about -0.07 of its potential returns per unit of risk. The Taiwan Mobile Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,300 in Taiwan Mobile Co on August 28, 2024 and sell it today you would earn a total of 200.00 from holding Taiwan Mobile Co or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Taiwan Mobile Co
Performance |
| Timeline |
| Fubon Financial Holding |
| Taiwan Mobile |
Fubon Financial and Taiwan Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Taiwan Mobile
The main advantage of trading using opposite Fubon Financial and Taiwan Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Taiwan Mobile 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 Taiwan Mobile will offset losses from the drop in Taiwan Mobile's long position.| Fubon Financial vs. Tait Marketing Distribution | Fubon Financial vs. Cameo Communications | Fubon Financial vs. Ligitek Electronics Co | Fubon Financial vs. Excellence Optoelectronic |
| Taiwan Mobile vs. Chunghwa Telecom Co | Taiwan Mobile vs. CTBC Financial Holding | Taiwan Mobile vs. Fubon Financial Holding | Taiwan Mobile vs. President Chain Store |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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