Correlation Between Fubon Financial and Fu Burg
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Fu Burg 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 Fu Burg 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 Fu Burg Industrial, you can compare the effects of market volatilities on Fubon Financial and Fu Burg 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 Fu Burg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Fu Burg.
Diversification Opportunities for Fubon Financial and Fu Burg
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fubon and 8929 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg Industrial 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 Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of Fubon Financial i.e., Fubon Financial and Fu Burg go up and down completely randomly.
Pair Corralation between Fubon Financial and Fu Burg
Assuming the 90 days trading horizon Fubon Financial is expected to generate 12.34 times less return on investment than Fu Burg. But when comparing it to its historical volatility, Fubon Financial Holding is 6.94 times less risky than Fu Burg. It trades about 0.03 of its potential returns per unit of risk. Fu Burg Industrial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,075 in Fu Burg Industrial on September 3, 2024 and sell it today you would earn a total of 1,320 from holding Fu Burg Industrial or generate 63.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon Financial Holding vs. Fu Burg Industrial
Performance |
| Timeline |
| Fubon Financial Holding |
| Fu Burg Industrial |
Fubon Financial and Fu Burg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon Financial and Fu Burg
The main advantage of trading using opposite Fubon Financial and Fu Burg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Fu Burg 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 Fu Burg will offset losses from the drop in Fu Burg'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 |
| Fu Burg vs. Ruentex Development Co | Fu Burg vs. Symtek Automation Asia | Fu Burg vs. CTCI Corp | Fu Burg vs. Information Technology Total |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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