Correlation Between Fubon Financial and CHINA DEVELOPMENT
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and CHINA DEVELOPMENT 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 CHINA DEVELOPMENT 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 CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Fubon Financial and CHINA DEVELOPMENT 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 CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and CHINA DEVELOPMENT.
Diversification Opportunities for Fubon Financial and CHINA DEVELOPMENT
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and CHINA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT 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 CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Fubon Financial i.e., Fubon Financial and CHINA DEVELOPMENT go up and down completely randomly.
Pair Corralation between Fubon Financial and CHINA DEVELOPMENT
Assuming the 90 days trading horizon Fubon Financial Holding is expected to under-perform the CHINA DEVELOPMENT. But the stock apears to be less risky and, when comparing its historical volatility, Fubon Financial Holding is 8.79 times less risky than CHINA DEVELOPMENT. The stock trades about -0.09 of its potential returns per unit of risk. The CHINA DEVELOPMENT FINANCIAL is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 765.00 in CHINA DEVELOPMENT FINANCIAL on August 31, 2024 and sell it today you would earn a total of 14.00 from holding CHINA DEVELOPMENT FINANCIAL or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. CHINA DEVELOPMENT FINANCIAL
Performance |
| Timeline |
| Fubon Financial Holding |
| CHINA DEVELOPMENT |
Fubon Financial and CHINA DEVELOPMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and CHINA DEVELOPMENT
The main advantage of trading using opposite Fubon Financial and CHINA DEVELOPMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, CHINA DEVELOPMENT 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 CHINA DEVELOPMENT will offset losses from the drop in CHINA DEVELOPMENT's long position.| Fubon Financial vs. Lien Chang Electronic | Fubon Financial vs. Taisol Electronics Co | Fubon Financial vs. Tung Thih Electronic | Fubon Financial vs. WT Microelectronics Co |
| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. CTBC Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Mid Cap | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |