Correlation Between Fubon Financial and Yung Chi
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Yung Chi 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 Yung Chi 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 Yung Chi Paint, you can compare the effects of market volatilities on Fubon Financial and Yung Chi 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 Yung Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Yung Chi.
Diversification Opportunities for Fubon Financial and Yung Chi
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Yung is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Yung Chi Paint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yung Chi Paint 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 Yung Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yung Chi Paint has no effect on the direction of Fubon Financial i.e., Fubon Financial and Yung Chi go up and down completely randomly.
Pair Corralation between Fubon Financial and Yung Chi
Assuming the 90 days trading horizon Fubon Financial is expected to generate 4.04 times less return on investment than Yung Chi. But when comparing it to its historical volatility, Fubon Financial Holding is 1.7 times less risky than Yung Chi. It trades about 0.02 of its potential returns per unit of risk. Yung Chi Paint is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,744 in Yung Chi Paint on September 3, 2024 and sell it today you would earn a total of 926.00 from holding Yung Chi Paint or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Fubon Financial Holding vs. Yung Chi Paint
Performance |
| Timeline |
| Fubon Financial Holding |
| Yung Chi Paint |
Fubon Financial and Yung Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Yung Chi
The main advantage of trading using opposite Fubon Financial and Yung Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Yung Chi 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 Yung Chi will offset losses from the drop in Yung Chi's long position.| Fubon Financial vs. Arima Communications Corp | Fubon Financial vs. Gamania Digital Entertainment | Fubon Financial vs. Tehmag Foods | Fubon Financial vs. U Tech Media Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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