Correlation Between Service Quality and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Service Quality 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 Service Quality and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Service Quality Technology and Fubon Financial Holding, you can compare the effects of market volatilities on Service Quality 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 Service Quality with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Service Quality and Fubon Financial.
Diversification Opportunities for Service Quality and Fubon Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Service and Fubon is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Service Quality Technology 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 Service Quality 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 Service Quality Technology 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 Service Quality i.e., Service Quality and Fubon Financial go up and down completely randomly.
Pair Corralation between Service Quality and Fubon Financial
Assuming the 90 days trading horizon Service Quality Technology is expected to under-perform the Fubon Financial. In addition to that, Service Quality is 3.07 times more volatile than Fubon Financial Holding. It trades about -0.22 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about -0.11 per unit of volatility. If you would invest 9,040 in Fubon Financial Holding on September 2, 2024 and sell it today you would lose (240.00) from holding Fubon Financial Holding or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Service Quality Technology vs. Fubon Financial Holding
Performance |
| Timeline |
| Service Quality Tech |
| Fubon Financial Holding |
Service Quality and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Service Quality and Fubon Financial
The main advantage of trading using opposite Service Quality and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Service Quality 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.| Service Quality vs. Fubon Financial Holding | Service Quality vs. Hua Nan Financial | Service Quality vs. APEX International Financial | Service Quality vs. Chinese Maritime Transport |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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