Correlation Between Fubon Financial and Gudeng Precision
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Gudeng Precision 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 Gudeng Precision 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 Gudeng Precision Industrial, you can compare the effects of market volatilities on Fubon Financial and Gudeng Precision 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 Gudeng Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Gudeng Precision.
Diversification Opportunities for Fubon Financial and Gudeng Precision
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Gudeng is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Gudeng Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gudeng Precision Ind 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 Gudeng Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gudeng Precision Ind has no effect on the direction of Fubon Financial i.e., Fubon Financial and Gudeng Precision go up and down completely randomly.
Pair Corralation between Fubon Financial and Gudeng Precision
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.05 times more return on investment than Gudeng Precision. However, Fubon Financial Holding is 20.09 times less risky than Gudeng Precision. It trades about 0.31 of its potential returns per unit of risk. Gudeng Precision Industrial is currently generating about -0.2 per unit of risk. If you would invest 6,250 in Fubon Financial Holding on September 4, 2024 and sell it today you would earn a total of 40.00 from holding Fubon Financial Holding or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Gudeng Precision Industrial
Performance |
| Timeline |
| Fubon Financial Holding |
| Gudeng Precision Ind |
Fubon Financial and Gudeng Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Gudeng Precision
The main advantage of trading using opposite Fubon Financial and Gudeng Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Gudeng Precision 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 Gudeng Precision will offset losses from the drop in Gudeng Precision's long position.| Fubon Financial vs. Chinese Maritime Transport | Fubon Financial vs. Grand Ocean Retail | Fubon Financial vs. Niko Semiconductor Co | Fubon Financial vs. Vanguard International Semiconductor |
| Gudeng Precision vs. GlobalWafers Co | Gudeng Precision vs. Vanguard International Semiconductor | Gudeng Precision vs. Marketech International Corp | Gudeng Precision vs. WIN Semiconductors |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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