Correlation Between Fubon Financial and Yulon Nissan
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Yulon Nissan 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 Yulon Nissan 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 Yulon Nissan Motor, you can compare the effects of market volatilities on Fubon Financial and Yulon Nissan 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 Yulon Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Yulon Nissan.
Diversification Opportunities for Fubon Financial and Yulon Nissan
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Yulon is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Yulon Nissan Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Nissan Motor 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 Yulon Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Nissan Motor has no effect on the direction of Fubon Financial i.e., Fubon Financial and Yulon Nissan go up and down completely randomly.
Pair Corralation between Fubon Financial and Yulon Nissan
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.05 times more return on investment than Yulon Nissan. However, Fubon Financial Holding is 20.65 times less risky than Yulon Nissan. It trades about 0.31 of its potential returns per unit of risk. Yulon Nissan Motor is currently generating about -0.48 per unit of risk. If you would invest 6,230 in Fubon Financial Holding on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Fubon Financial Holding or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fubon Financial Holding vs. Yulon Nissan Motor
Performance |
| Timeline |
| Fubon Financial Holding |
| Yulon Nissan Motor |
Fubon Financial and Yulon Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Yulon Nissan
The main advantage of trading using opposite Fubon Financial and Yulon Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Yulon Nissan 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 Yulon Nissan will offset losses from the drop in Yulon Nissan's long position.| Fubon Financial vs. Tex Ray Industrial Co | Fubon Financial vs. Chain Chon Industrial | Fubon Financial vs. Louisa Professional Coffee | Fubon Financial vs. Grand Ocean Retail |
| Yulon Nissan vs. Hotai Motor Co | Yulon Nissan vs. Yulon Motor Co | Yulon Nissan vs. Cheng Shin Rubber | Yulon Nissan vs. Formosa Chemicals Fibre |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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