Correlation Between Fubon Financial and Long Chen
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Long Chen 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 Long Chen 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 Long Chen Paper, you can compare the effects of market volatilities on Fubon Financial and Long Chen 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 Long Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Long Chen.
Diversification Opportunities for Fubon Financial and Long Chen
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Long is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Long Chen Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Chen Paper 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 Long Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Chen Paper has no effect on the direction of Fubon Financial i.e., Fubon Financial and Long Chen go up and down completely randomly.
Pair Corralation between Fubon Financial and Long Chen
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.29 times more return on investment than Long Chen. However, Fubon Financial Holding is 3.46 times less risky than Long Chen. It trades about 0.02 of its potential returns per unit of risk. Long Chen Paper is currently generating about -0.03 per unit of risk. If you would invest 6,060 in Fubon Financial Holding on September 12, 2024 and sell it today you would earn a total of 250.00 from holding Fubon Financial Holding or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Long Chen Paper
Performance |
| Timeline |
| Fubon Financial Holding |
| Long Chen Paper |
Fubon Financial and Long Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Long Chen
The main advantage of trading using opposite Fubon Financial and Long Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Long Chen 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 Long Chen will offset losses from the drop in Long Chen's long position.| Fubon Financial vs. Cathay Financial Holding | Fubon Financial vs. Cathay Financial Holding | Fubon Financial vs. CTBC Financial Holding | Fubon Financial vs. Mercuries Life Insurance |
| Long Chen vs. Tainan Spinning Co | Long Chen vs. Lealea Enterprise Co | Long Chen vs. China Petrochemical Development | Long Chen vs. Ruentex Development Co |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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