Correlation Between Fubon Financial and X Legend
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and X Legend 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 X Legend 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 X Legend Entertainment Co, you can compare the effects of market volatilities on Fubon Financial and X Legend 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 X Legend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and X Legend.
Diversification Opportunities for Fubon Financial and X Legend
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and 4994 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and X Legend Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Legend Entertainment 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 X Legend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Legend Entertainment has no effect on the direction of Fubon Financial i.e., Fubon Financial and X Legend go up and down completely randomly.
Pair Corralation between Fubon Financial and X Legend
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.92 times more return on investment than X Legend. However, Fubon Financial Holding is 1.08 times less risky than X Legend. It trades about -0.01 of its potential returns per unit of risk. X Legend Entertainment Co is currently generating about -0.02 per unit of risk. If you would invest 9,200 in Fubon Financial Holding on August 28, 2024 and sell it today you would lose (150.00) from holding Fubon Financial Holding or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. X Legend Entertainment Co
Performance |
| Timeline |
| Fubon Financial Holding |
| X Legend Entertainment |
Fubon Financial and X Legend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and X Legend
The main advantage of trading using opposite Fubon Financial and X Legend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, X Legend 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 X Legend will offset losses from the drop in X Legend's long position.| Fubon Financial vs. Healthconn Corp | Fubon Financial vs. General Plastic Industrial | Fubon Financial vs. Eternal Materials Co | Fubon Financial vs. Asia Electronic Material |
| X Legend vs. Chunghwa Telecom Co | X Legend vs. CTBC Financial Holding | X Legend vs. Fubon Financial Holding | X Legend 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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