Correlation Between Fubon Financial and Avalue Technology
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Avalue Technology 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 Avalue Technology 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 Avalue Technology, you can compare the effects of market volatilities on Fubon Financial and Avalue Technology 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 Avalue Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Avalue Technology.
Diversification Opportunities for Fubon Financial and Avalue Technology
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Avalue is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Avalue Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avalue Technology 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 Avalue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avalue Technology has no effect on the direction of Fubon Financial i.e., Fubon Financial and Avalue Technology go up and down completely randomly.
Pair Corralation between Fubon Financial and Avalue Technology
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.07 times more return on investment than Avalue Technology. However, Fubon Financial Holding is 14.64 times less risky than Avalue Technology. It trades about 0.35 of its potential returns per unit of risk. Avalue Technology is currently generating about -0.14 per unit of risk. If you would invest 6,180 in Fubon Financial Holding on September 12, 2024 and sell it today you would earn a total of 130.00 from holding Fubon Financial Holding or generate 2.1% 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. Avalue Technology
Performance |
| Timeline |
| Fubon Financial Holding |
| Avalue Technology |
Fubon Financial and Avalue Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Avalue Technology
The main advantage of trading using opposite Fubon Financial and Avalue Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Avalue Technology 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 Avalue Technology will offset losses from the drop in Avalue Technology'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 |
| Avalue Technology vs. Qisda Corp | Avalue Technology vs. Quanta Computer | Avalue Technology vs. Wistron Corp | Avalue Technology vs. Delta Electronics |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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