Correlation Between Fubon Financial and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and YuantaP Shares 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 YuantaP Shares 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 YuantaP shares Taiwan Electronics, you can compare the effects of market volatilities on Fubon Financial and YuantaP Shares 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 YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and YuantaP Shares.
Diversification Opportunities for Fubon Financial and YuantaP Shares
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fubon and YuantaP is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and YuantaP shares Taiwan Electron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares Taiwan 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 YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares Taiwan has no effect on the direction of Fubon Financial i.e., Fubon Financial and YuantaP Shares go up and down completely randomly.
Pair Corralation between Fubon Financial and YuantaP Shares
Assuming the 90 days trading horizon Fubon Financial Holding is not expected to generate positive returns. However, Fubon Financial Holding is 15.85 times less risky than YuantaP Shares. It waists most of its returns potential to compensate for thr risk taken. YuantaP Shares is generating about -0.18 per unit of risk. If you would invest 6,010 in Fubon Financial Holding on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Fubon Financial Holding or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. YuantaP shares Taiwan Electron
Performance |
| Timeline |
| Fubon Financial Holding |
| YuantaP shares Taiwan |
Fubon Financial and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and YuantaP Shares
The main advantage of trading using opposite Fubon Financial and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, YuantaP Shares 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 YuantaP Shares will offset losses from the drop in YuantaP Shares' long position.| Fubon Financial vs. YuantaP shares Taiwan Top | Fubon Financial vs. YuantaP shares Taiwan Mid Cap | Fubon Financial vs. YuantaP shares Taiwan Electronics | Fubon Financial vs. Fubon MSCI Taiwan |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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