Correlation Between Fubon Financial and Longwell
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Longwell 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 Longwell 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 Longwell Co, you can compare the effects of market volatilities on Fubon Financial and Longwell 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 Longwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Longwell.
Diversification Opportunities for Fubon Financial and Longwell
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Longwell is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Longwell Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longwell 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 Longwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longwell has no effect on the direction of Fubon Financial i.e., Fubon Financial and Longwell go up and down completely randomly.
Pair Corralation between Fubon Financial and Longwell
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.04 times more return on investment than Longwell. However, Fubon Financial Holding is 22.58 times less risky than Longwell. It trades about 0.25 of its potential returns per unit of risk. Longwell Co is currently generating about -0.17 per unit of risk. If you would invest 6,250 in Fubon Financial Holding on September 3, 2024 and sell it today you would earn a total of 30.00 from holding Fubon Financial Holding or generate 0.48% 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. Longwell Co
Performance |
| Timeline |
| Fubon Financial Holding |
| Longwell |
Fubon Financial and Longwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Longwell
The main advantage of trading using opposite Fubon Financial and Longwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Longwell 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 Longwell will offset losses from the drop in Longwell's long position.| Fubon Financial vs. Arima Communications Corp | Fubon Financial vs. Gamania Digital Entertainment | Fubon Financial vs. Tehmag Foods | Fubon Financial vs. U Tech Media Corp |
| Longwell vs. Acbel Polytech | Longwell vs. Primax Electronics | Longwell vs. Flexium Interconnect | Longwell vs. Career Technology MFG |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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