Correlation Between Newretail and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Newretail 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 Newretail and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Fubon Financial Holding, you can compare the effects of market volatilities on Newretail 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 Newretail with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Fubon Financial.
Diversification Opportunities for Newretail and Fubon Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newretail and Fubon is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co 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 Newretail 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 Newretail Co 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 Newretail i.e., Newretail and Fubon Financial go up and down completely randomly.
Pair Corralation between Newretail and Fubon Financial
Assuming the 90 days trading horizon Newretail Co is expected to generate 2.14 times more return on investment than Fubon Financial. However, Newretail is 2.14 times more volatile than Fubon Financial Holding. It trades about 0.15 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about -0.09 per unit of risk. If you would invest 2,450 in Newretail Co on October 12, 2024 and sell it today you would earn a total of 150.00 from holding Newretail Co or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newretail Co vs. Fubon Financial Holding
Performance |
| Timeline |
| Newretail |
| Fubon Financial Holding |
Newretail and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and Fubon Financial
The main advantage of trading using opposite Newretail and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail 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.| Newretail vs. U Tech Media Corp | Newretail vs. Yuanta Financial Holdings | Newretail vs. First Insurance Co | Newretail vs. Pili International Multimedia |
| Fubon Financial vs. Wei Chuan Foods | Fubon Financial vs. Chernan Metal Industrial | Fubon Financial vs. Asia Metal Industries | Fubon Financial vs. Chunghwa Telecom 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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