Correlation Between Fubon Financial and Shinkong Insurance
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Shinkong Insurance 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 Shinkong Insurance 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 Shinkong Insurance Co, you can compare the effects of market volatilities on Fubon Financial and Shinkong Insurance 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 Shinkong Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Shinkong Insurance.
Diversification Opportunities for Fubon Financial and Shinkong Insurance
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fubon and Shinkong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Shinkong Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Insurance 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 Shinkong Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Insurance has no effect on the direction of Fubon Financial i.e., Fubon Financial and Shinkong Insurance go up and down completely randomly.
Pair Corralation between Fubon Financial and Shinkong Insurance
Assuming the 90 days trading horizon Fubon Financial is expected to generate 1.9 times less return on investment than Shinkong Insurance. But when comparing it to its historical volatility, Fubon Financial Holding is 11.04 times less risky than Shinkong Insurance. It trades about 0.3 of its potential returns per unit of risk. Shinkong Insurance Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9,940 in Shinkong Insurance Co on August 29, 2024 and sell it today you would earn a total of 110.00 from holding Shinkong Insurance Co or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Shinkong Insurance Co
Performance |
| Timeline |
| Fubon Financial Holding |
| Shinkong Insurance |
Fubon Financial and Shinkong Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Shinkong Insurance
The main advantage of trading using opposite Fubon Financial and Shinkong Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Shinkong Insurance 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 Shinkong Insurance will offset losses from the drop in Shinkong Insurance'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 |
| Shinkong Insurance vs. Taiwan Secom Co | Shinkong Insurance vs. TTET Union Corp | Shinkong Insurance vs. China Steel Chemical | Shinkong Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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