Correlation Between Fubon Financial and Ambassador Hotel
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Ambassador Hotel 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 Ambassador Hotel 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 Ambassador Hotel, you can compare the effects of market volatilities on Fubon Financial and Ambassador Hotel 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 Ambassador Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Ambassador Hotel.
Diversification Opportunities for Fubon Financial and Ambassador Hotel
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fubon and Ambassador is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Ambassador Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador Hotel 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 Ambassador Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Hotel has no effect on the direction of Fubon Financial i.e., Fubon Financial and Ambassador Hotel go up and down completely randomly.
Pair Corralation between Fubon Financial and Ambassador Hotel
Assuming the 90 days trading horizon Fubon Financial is expected to generate 12.63 times less return on investment than Ambassador Hotel. But when comparing it to its historical volatility, Fubon Financial Holding is 6.69 times less risky than Ambassador Hotel. It trades about 0.04 of its potential returns per unit of risk. Ambassador Hotel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,185 in Ambassador Hotel on September 12, 2024 and sell it today you would earn a total of 2,595 from holding Ambassador Hotel or generate 81.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Ambassador Hotel
Performance |
| Timeline |
| Fubon Financial Holding |
| Ambassador Hotel |
Fubon Financial and Ambassador Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Ambassador Hotel
The main advantage of trading using opposite Fubon Financial and Ambassador Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Ambassador Hotel 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 Ambassador Hotel will offset losses from the drop in Ambassador Hotel's long position.| Fubon Financial vs. CTBC Financial Holding | Fubon Financial vs. YuantaP shares Taiwan Mid Cap | Fubon Financial vs. YuantaP shares Taiwan Electronics | Fubon Financial vs. Fubon MSCI Taiwan |
| Ambassador Hotel vs. Feng Tay Enterprises | Ambassador Hotel vs. Ruentex Development Co | Ambassador Hotel vs. WiseChip Semiconductor | Ambassador Hotel vs. Novatek Microelectronics Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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