Correlation Between Fubon Financial and Sunmax Biotechnology
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Sunmax Biotechnology 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 Sunmax Biotechnology 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 Sunmax Biotechnology Co, you can compare the effects of market volatilities on Fubon Financial and Sunmax Biotechnology 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 Sunmax Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Sunmax Biotechnology.
Diversification Opportunities for Fubon Financial and Sunmax Biotechnology
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Sunmax is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Sunmax Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunmax Biotechnology 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 Sunmax Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunmax Biotechnology has no effect on the direction of Fubon Financial i.e., Fubon Financial and Sunmax Biotechnology go up and down completely randomly.
Pair Corralation between Fubon Financial and Sunmax Biotechnology
Assuming the 90 days trading horizon Fubon Financial is expected to generate 20.59 times less return on investment than Sunmax Biotechnology. But when comparing it to its historical volatility, Fubon Financial Holding is 8.9 times less risky than Sunmax Biotechnology. It trades about 0.03 of its potential returns per unit of risk. Sunmax Biotechnology Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,250 in Sunmax Biotechnology Co on August 28, 2024 and sell it today you would earn a total of 13,600 from holding Sunmax Biotechnology Co or generate 95.44% 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. Sunmax Biotechnology Co
Performance |
| Timeline |
| Fubon Financial Holding |
| Sunmax Biotechnology |
Fubon Financial and Sunmax Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Sunmax Biotechnology
The main advantage of trading using opposite Fubon Financial and Sunmax Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Sunmax Biotechnology 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 Sunmax Biotechnology will offset losses from the drop in Sunmax Biotechnology's long position.| Fubon Financial vs. Skardin Industrial | Fubon Financial vs. Wah Hong Industrial | Fubon Financial vs. PlayNitride | Fubon Financial vs. Sports Gear Co |
| Sunmax Biotechnology vs. OBI Pharma | Sunmax Biotechnology vs. Tanvex BioPharma | Sunmax Biotechnology vs. Adimmune 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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