Correlation Between Fubon Financial and Galaxy Software
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Galaxy Software 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 Galaxy Software 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 Galaxy Software Services, you can compare the effects of market volatilities on Fubon Financial and Galaxy Software 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 Galaxy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Galaxy Software.
Diversification Opportunities for Fubon Financial and Galaxy Software
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Galaxy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Galaxy Software Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Software Services 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 Galaxy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Software Services has no effect on the direction of Fubon Financial i.e., Fubon Financial and Galaxy Software go up and down completely randomly.
Pair Corralation between Fubon Financial and Galaxy Software
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.04 times more return on investment than Galaxy Software. However, Fubon Financial Holding is 27.13 times less risky than Galaxy Software. It trades about -0.09 of its potential returns per unit of risk. Galaxy Software Services is currently generating about -0.1 per unit of risk. If you would invest 6,010 in Fubon Financial Holding on September 1, 2024 and sell it today you would lose (10.00) from holding Fubon Financial Holding or give up 0.17% 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. Galaxy Software Services
Performance |
| Timeline |
| Fubon Financial Holding |
| Galaxy Software Services |
Fubon Financial and Galaxy Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Galaxy Software
The main advantage of trading using opposite Fubon Financial and Galaxy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Galaxy Software 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 Galaxy Software will offset losses from the drop in Galaxy Software's long position.| Fubon Financial vs. Fu Burg Industrial | Fubon Financial vs. Unique Optical Industrial | Fubon Financial vs. Tex Ray Industrial Co | Fubon Financial vs. Chialin Precision Industrial |
| Galaxy Software vs. GeneFerm Biotechnology Co | Galaxy Software vs. Eternal Materials Co | Galaxy Software vs. General Plastic Industrial | Galaxy Software vs. CKM Building Material |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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