Correlation Between Fubon Financial and Wei Chuan
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Wei Chuan 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 Wei Chuan 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 Wei Chuan Foods, you can compare the effects of market volatilities on Fubon Financial and Wei Chuan 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 Wei Chuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Wei Chuan.
Diversification Opportunities for Fubon Financial and Wei Chuan
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fubon and Wei is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Wei Chuan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wei Chuan Foods 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 Wei Chuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wei Chuan Foods has no effect on the direction of Fubon Financial i.e., Fubon Financial and Wei Chuan go up and down completely randomly.
Pair Corralation between Fubon Financial and Wei Chuan
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.48 times more return on investment than Wei Chuan. However, Fubon Financial Holding is 2.09 times less risky than Wei Chuan. It trades about 0.0 of its potential returns per unit of risk. Wei Chuan Foods is currently generating about -0.02 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 Against |
| Strength | Insignificant |
| Accuracy | 99.5% |
| Values | Daily Returns |
Fubon Financial Holding vs. Wei Chuan Foods
Performance |
| Timeline |
| Fubon Financial Holding |
| Wei Chuan Foods |
Fubon Financial and Wei Chuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Wei Chuan
The main advantage of trading using opposite Fubon Financial and Wei Chuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Wei Chuan 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 Wei Chuan will offset losses from the drop in Wei Chuan's long position.| Fubon Financial vs. Champion Building Materials | Fubon Financial vs. Camellia Metal Co | Fubon Financial vs. First Hotel Co | Fubon Financial vs. Sunspring Metal Corp |
| Wei Chuan vs. Great Wall Enterprise | Wei Chuan vs. TTET Union Corp | Wei Chuan vs. Uni President Enterprises Corp | Wei Chuan vs. Lien Hwa Industrial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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