Correlation Between Fubon Financial and Wonderful
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Wonderful 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 Wonderful 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 Wonderful Hi Tech Co, you can compare the effects of market volatilities on Fubon Financial and Wonderful 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 Wonderful. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Wonderful.
Diversification Opportunities for Fubon Financial and Wonderful
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and Wonderful is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Wonderful Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonderful Hi Tech 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 Wonderful. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonderful Hi Tech has no effect on the direction of Fubon Financial i.e., Fubon Financial and Wonderful go up and down completely randomly.
Pair Corralation between Fubon Financial and Wonderful
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.15 times more return on investment than Wonderful. However, Fubon Financial Holding is 6.63 times less risky than Wonderful. It trades about 0.02 of its potential returns per unit of risk. Wonderful Hi Tech Co is currently generating about -0.01 per unit of risk. If you would invest 5,950 in Fubon Financial Holding on September 3, 2024 and sell it today you would earn a total of 50.00 from holding Fubon Financial Holding or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Wonderful Hi Tech Co
Performance |
| Timeline |
| Fubon Financial Holding |
| Wonderful Hi Tech |
Fubon Financial and Wonderful Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Wonderful
The main advantage of trading using opposite Fubon Financial and Wonderful positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Wonderful 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 Wonderful will offset losses from the drop in Wonderful's long position.| Fubon Financial vs. YuantaP shares Taiwan Electronics | Fubon Financial vs. YuantaP shares Taiwan Mid Cap | Fubon Financial vs. Fubon MSCI Taiwan | Fubon Financial vs. YuantaP shares Taiwan Top |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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