Correlation Between Fubon Financial and Mechema Chemicals
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Mechema Chemicals 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 Mechema Chemicals 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 Mechema Chemicals Int, you can compare the effects of market volatilities on Fubon Financial and Mechema Chemicals 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 Mechema Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Mechema Chemicals.
Diversification Opportunities for Fubon Financial and Mechema Chemicals
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Mechema is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Mechema Chemicals Int in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechema Chemicals Int 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 Mechema Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechema Chemicals Int has no effect on the direction of Fubon Financial i.e., Fubon Financial and Mechema Chemicals go up and down completely randomly.
Pair Corralation between Fubon Financial and Mechema Chemicals
Assuming the 90 days trading horizon Fubon Financial Holding is not expected to generate positive returns. However, Fubon Financial Holding is 24.35 times less risky than Mechema Chemicals. It waists most of its returns potential to compensate for thr risk taken. Mechema Chemicals is generating about 0.02 per unit of risk. If you would invest 7,210 in Mechema Chemicals Int on August 29, 2024 and sell it today you would earn a total of 40.00 from holding Mechema Chemicals Int or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Mechema Chemicals Int
Performance |
| Timeline |
| Fubon Financial Holding |
| Mechema Chemicals Int |
Fubon Financial and Mechema Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Mechema Chemicals
The main advantage of trading using opposite Fubon Financial and Mechema Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Mechema Chemicals 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 Mechema Chemicals will offset losses from the drop in Mechema Chemicals' 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 |
| Mechema Chemicals vs. Delta Electronics | Mechema Chemicals vs. China Steel Chemical | Mechema Chemicals vs. Hota Industrial Mfg | Mechema Chemicals vs. Ruentex Development 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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