Correlation Between Fubon Financial and Lungyen Life
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Lungyen Life 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 Lungyen Life 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 Lungyen Life Service, you can compare the effects of market volatilities on Fubon Financial and Lungyen Life 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 Lungyen Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Lungyen Life.
Diversification Opportunities for Fubon Financial and Lungyen Life
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fubon and Lungyen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Lungyen Life Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lungyen Life Service 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 Lungyen Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lungyen Life Service has no effect on the direction of Fubon Financial i.e., Fubon Financial and Lungyen Life go up and down completely randomly.
Pair Corralation between Fubon Financial and Lungyen Life
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.11 times more return on investment than Lungyen Life. However, Fubon Financial Holding is 9.33 times less risky than Lungyen Life. It trades about 0.42 of its potential returns per unit of risk. Lungyen Life Service is currently generating about -0.16 per unit of risk. If you would invest 6,020 in Fubon Financial Holding on October 28, 2024 and sell it today you would earn a total of 60.00 from holding Fubon Financial Holding or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Lungyen Life Service
Performance |
| Timeline |
| Fubon Financial Holding |
| Lungyen Life Service |
Fubon Financial and Lungyen Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Lungyen Life
The main advantage of trading using opposite Fubon Financial and Lungyen Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Lungyen Life 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 Lungyen Life will offset losses from the drop in Lungyen Life's long position.| Fubon Financial vs. Kindom Construction Corp | Fubon Financial vs. Da Cin Construction Co | Fubon Financial vs. Lihtai Construction Enterprise | Fubon Financial vs. X Legend Entertainment Co |
| Lungyen Life vs. Cleanaway Co | Lungyen Life vs. StShine Optical Co | Lungyen Life vs. Formosa International Hotels | Lungyen Life vs. Poya International 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 Stocks Directory module to find actively traded stocks across global markets.
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