Correlation Between Datavan International and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Datavan International 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 Datavan International and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datavan International and Fubon Financial Holding, you can compare the effects of market volatilities on Datavan International 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 Datavan International with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datavan International and Fubon Financial.
Diversification Opportunities for Datavan International and Fubon Financial
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Datavan and Fubon is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Datavan International 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 Datavan International 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 Datavan International 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 Datavan International i.e., Datavan International and Fubon Financial go up and down completely randomly.
Pair Corralation between Datavan International and Fubon Financial
Assuming the 90 days trading horizon Datavan International is expected to under-perform the Fubon Financial. In addition to that, Datavan International is 2.5 times more volatile than Fubon Financial Holding. It trades about 0.0 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.08 per unit of volatility. If you would invest 6,120 in Fubon Financial Holding on September 2, 2024 and sell it today you would earn a total of 2,680 from holding Fubon Financial Holding or generate 43.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datavan International vs. Fubon Financial Holding
Performance |
| Timeline |
| Datavan International |
| Fubon Financial Holding |
Datavan International and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datavan International and Fubon Financial
The main advantage of trading using opposite Datavan International and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datavan International 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.| Datavan International vs. C Media Electronics | Datavan International vs. Chung Lien Transportation | Datavan International vs. Sports Gear Co | Datavan International vs. GAME HOURS |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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