Correlation Between Fubon Financial and Xintec
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Xintec 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 Xintec 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 Xintec, you can compare the effects of market volatilities on Fubon Financial and Xintec 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 Xintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Xintec.
Diversification Opportunities for Fubon Financial and Xintec
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Xintec is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec 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 Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Fubon Financial i.e., Fubon Financial and Xintec go up and down completely randomly.
Pair Corralation between Fubon Financial and Xintec
Assuming the 90 days trading horizon Fubon Financial is expected to generate 22.14 times less return on investment than Xintec. But when comparing it to its historical volatility, Fubon Financial Holding is 6.26 times less risky than Xintec. It trades about 0.02 of its potential returns per unit of risk. Xintec is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,509 in Xintec on September 12, 2024 and sell it today you would earn a total of 7,491 from holding Xintec or generate 59.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Fubon Financial Holding vs. Xintec
Performance |
| Timeline |
| Fubon Financial Holding |
| Xintec |
Fubon Financial and Xintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Xintec
The main advantage of trading using opposite Fubon Financial and Xintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Xintec 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 Xintec will offset losses from the drop in Xintec'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 |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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