Correlation Between Fubon Financial and TWOWAY Communications
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and TWOWAY Communications 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 TWOWAY Communications 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 TWOWAY Communications, you can compare the effects of market volatilities on Fubon Financial and TWOWAY Communications 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 TWOWAY Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and TWOWAY Communications.
Diversification Opportunities for Fubon Financial and TWOWAY Communications
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and TWOWAY is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and TWOWAY Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TWOWAY Communications 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 TWOWAY Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TWOWAY Communications has no effect on the direction of Fubon Financial i.e., Fubon Financial and TWOWAY Communications go up and down completely randomly.
Pair Corralation between Fubon Financial and TWOWAY Communications
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.03 times more return on investment than TWOWAY Communications. However, Fubon Financial Holding is 37.49 times less risky than TWOWAY Communications. It trades about 0.31 of its potential returns per unit of risk. TWOWAY Communications is currently generating about -0.21 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. TWOWAY Communications
Performance |
| Timeline |
| Fubon Financial Holding |
| TWOWAY Communications |
Fubon Financial and TWOWAY Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and TWOWAY Communications
The main advantage of trading using opposite Fubon Financial and TWOWAY Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, TWOWAY Communications 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 TWOWAY Communications will offset losses from the drop in TWOWAY Communications' 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 |
| TWOWAY Communications vs. Accton Technology Corp | TWOWAY Communications vs. Wistron NeWeb Corp | TWOWAY Communications vs. Alpha Networks | TWOWAY Communications vs. Gemtek Technology Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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