Correlation Between Fubon Financial and CTBC Financial
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and CTBC Financial 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 CTBC Financial 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 CTBC Financial Holding, you can compare the effects of market volatilities on Fubon Financial and CTBC Financial 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 CTBC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and CTBC Financial.
Diversification Opportunities for Fubon Financial and CTBC Financial
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and CTBC is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and CTBC Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTBC Financial Holding 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 CTBC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTBC Financial Holding has no effect on the direction of Fubon Financial i.e., Fubon Financial and CTBC Financial go up and down completely randomly.
Pair Corralation between Fubon Financial and CTBC Financial
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 2.71 times more return on investment than CTBC Financial. However, Fubon Financial is 2.71 times more volatile than CTBC Financial Holding. It trades about 0.01 of its potential returns per unit of risk. CTBC Financial Holding is currently generating about -0.04 per unit of risk. If you would invest 6,260 in Fubon Financial Holding on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Fubon Financial Holding or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. CTBC Financial Holding
Performance |
| Timeline |
| Fubon Financial Holding |
| CTBC Financial Holding |
Fubon Financial and CTBC Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and CTBC Financial
The main advantage of trading using opposite Fubon Financial and CTBC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, CTBC Financial 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 CTBC Financial will offset losses from the drop in CTBC Financial's long position.| Fubon Financial vs. Air Asia Co | Fubon Financial vs. International CSRC Investment | Fubon Financial vs. Professional Computer Technology | Fubon Financial vs. U Media Communications |
| CTBC Financial vs. Nankang Rubber Tire | CTBC Financial vs. Grand Ocean Retail | CTBC Financial vs. Grand Plastic Technology | CTBC Financial vs. Tainet Communication System |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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