Correlation Between Fubon Financial and ECloudvalley Digital
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and ECloudvalley Digital 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 ECloudvalley Digital 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 eCloudvalley Digital Technology, you can compare the effects of market volatilities on Fubon Financial and ECloudvalley Digital 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 ECloudvalley Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and ECloudvalley Digital.
Diversification Opportunities for Fubon Financial and ECloudvalley Digital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and ECloudvalley is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and eCloudvalley Digital Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eCloudvalley Digital 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 ECloudvalley Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eCloudvalley Digital has no effect on the direction of Fubon Financial i.e., Fubon Financial and ECloudvalley Digital go up and down completely randomly.
Pair Corralation between Fubon Financial and ECloudvalley Digital
Assuming the 90 days trading horizon Fubon Financial is expected to generate 2.18 times less return on investment than ECloudvalley Digital. But when comparing it to its historical volatility, Fubon Financial Holding is 35.24 times less risky than ECloudvalley Digital. It trades about 0.25 of its potential returns per unit of risk. eCloudvalley Digital Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,350 in eCloudvalley Digital Technology on October 13, 2024 and sell it today you would lose (50.00) from holding eCloudvalley Digital Technology or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. eCloudvalley Digital Technolog
Performance |
| Timeline |
| Fubon Financial Holding |
| eCloudvalley Digital |
Fubon Financial and ECloudvalley Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and ECloudvalley Digital
The main advantage of trading using opposite Fubon Financial and ECloudvalley Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, ECloudvalley Digital 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 ECloudvalley Digital will offset losses from the drop in ECloudvalley Digital's long position.| Fubon Financial vs. Sheng Yu Steel | Fubon Financial vs. United Radiant Technology | Fubon Financial vs. Wholetech System Hitech | Fubon Financial vs. Tung Ho Steel |
| ECloudvalley Digital vs. Fubon Financial Holding | ECloudvalley Digital vs. Celxpert Energy | ECloudvalley Digital vs. Systex Corp | ECloudvalley Digital vs. Accton Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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