Correlation Between Simple Mart and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Fubon Financial 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 Simple Mart and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simple Mart Retail and Fubon Financial Holding, you can compare the effects of market volatilities on Simple Mart and Fubon Financial 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 Simple Mart with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Fubon Financial.
Diversification Opportunities for Simple Mart and Fubon Financial
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Simple and Fubon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Simple Mart i.e., Simple Mart and Fubon Financial go up and down completely randomly.
Pair Corralation between Simple Mart and Fubon Financial
Assuming the 90 days trading horizon Simple Mart Retail is expected to generate 9.81 times more return on investment than Fubon Financial. However, Simple Mart is 9.81 times more volatile than Fubon Financial Holding. It trades about 0.05 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.17 per unit of risk. If you would invest 4,035 in Simple Mart Retail on November 30, 2024 and sell it today you would earn a total of 75.00 from holding Simple Mart Retail or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. Fubon Financial Holding
Performance |
| Timeline |
| Simple Mart Retail |
| Fubon Financial Holding |
Simple Mart and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Fubon Financial
The main advantage of trading using opposite Simple Mart and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Fubon Financial 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 Fubon Financial will offset losses from the drop in Fubon Financial's long position.| Simple Mart vs. Air Asia Co | Simple Mart vs. Sunspring Metal Corp | Simple Mart vs. Sesoda Corp | Simple Mart vs. China Airlines |
| Fubon Financial vs. Castles Technology Co | Fubon Financial vs. International Games System | Fubon Financial vs. Feng Ching Metal | Fubon Financial vs. ANJI Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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