Correlation Between Fubon Financial and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Chernan Metal 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 Chernan Metal 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 Chernan Metal Industrial, you can compare the effects of market volatilities on Fubon Financial and Chernan Metal 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 Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Chernan Metal.
Diversification Opportunities for Fubon Financial and Chernan Metal
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fubon and Chernan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Fubon Financial i.e., Fubon Financial and Chernan Metal go up and down completely randomly.
Pair Corralation between Fubon Financial and Chernan Metal
Assuming the 90 days trading horizon Fubon Financial is expected to generate 22.72 times less return on investment than Chernan Metal. But when comparing it to its historical volatility, Fubon Financial Holding is 25.28 times less risky than Chernan Metal. It trades about 0.3 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,605 in Chernan Metal Industrial on November 29, 2024 and sell it today you would earn a total of 525.00 from holding Chernan Metal Industrial or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Chernan Metal Industrial
Performance |
| Timeline |
| Fubon Financial Holding |
| Chernan Metal Industrial |
Fubon Financial and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Chernan Metal
The main advantage of trading using opposite Fubon Financial and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.| Fubon Financial vs. Kinsus Interconnect Technology | Fubon Financial vs. Genovate Biotechnology Co | Fubon Financial vs. CHINA DEVELOPMENT FINANCIAL | Fubon Financial vs. Sitronix Technology Corp |
| Chernan Metal vs. Wholetech System Hitech | Chernan Metal vs. Etrend Hightech | Chernan Metal vs. Simplo Technology Co | Chernan Metal vs. China Times Publishing |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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