Correlation Between Fubon Financial and Taiwan Cooperative
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Taiwan Cooperative 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 Cooperative 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 Cooperative Financial, you can compare the effects of market volatilities on Fubon Financial and Taiwan Cooperative 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 Cooperative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Taiwan Cooperative.
Diversification Opportunities for Fubon Financial and Taiwan Cooperative
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fubon and Taiwan is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Taiwan Cooperative Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Cooperative 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 Cooperative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Cooperative has no effect on the direction of Fubon Financial i.e., Fubon Financial and Taiwan Cooperative go up and down completely randomly.
Pair Corralation between Fubon Financial and Taiwan Cooperative
Assuming the 90 days trading horizon Fubon Financial Holding is expected to under-perform the Taiwan Cooperative. In addition to that, Fubon Financial is 1.65 times more volatile than Taiwan Cooperative Financial. It trades about -0.08 of its total potential returns per unit of risk. Taiwan Cooperative Financial is currently generating about -0.11 per unit of volatility. If you would invest 2,550 in Taiwan Cooperative Financial on August 29, 2024 and sell it today you would lose (40.00) from holding Taiwan Cooperative Financial or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Taiwan Cooperative Financial
Performance |
| Timeline |
| Fubon Financial Holding |
| Taiwan Cooperative |
Fubon Financial and Taiwan Cooperative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Taiwan Cooperative
The main advantage of trading using opposite Fubon Financial and Taiwan Cooperative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Taiwan Cooperative 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 Cooperative will offset losses from the drop in Taiwan Cooperative's long position.| Fubon Financial vs. Taiwan Secom Co | Fubon Financial vs. TTET Union Corp | Fubon Financial vs. China Steel Chemical | Fubon Financial vs. Taiwan Shin Kong |
| Taiwan Cooperative vs. Taiwan Secom Co | Taiwan Cooperative vs. TTET Union Corp | Taiwan Cooperative vs. China Steel Chemical | Taiwan Cooperative vs. Taiwan Shin Kong |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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