Correlation Between Tung Thih and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Tung Thih 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 Tung Thih and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tung Thih Electronic and Fubon Financial Holding, you can compare the effects of market volatilities on Tung Thih 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 Tung Thih with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tung Thih and Fubon Financial.
Diversification Opportunities for Tung Thih and Fubon Financial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tung and Fubon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tung Thih Electronic 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 Tung Thih 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 Tung Thih Electronic 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 Tung Thih i.e., Tung Thih and Fubon Financial go up and down completely randomly.
Pair Corralation between Tung Thih and Fubon Financial
Assuming the 90 days trading horizon Tung Thih Electronic is expected to generate 227.26 times more return on investment than Fubon Financial. However, Tung Thih is 227.26 times more volatile than Fubon Financial Holding. It trades about 0.06 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.0 per unit of risk. If you would invest 12,143 in Tung Thih Electronic on August 31, 2024 and sell it today you would lose (2,293) from holding Tung Thih Electronic or give up 18.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tung Thih Electronic vs. Fubon Financial Holding
Performance |
| Timeline |
| Tung Thih Electronic |
| Fubon Financial Holding |
Tung Thih and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tung Thih and Fubon Financial
The main advantage of trading using opposite Tung Thih and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tung Thih 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.| Tung Thih vs. Hota Industrial Mfg | Tung Thih vs. BizLink Holding | Tung Thih vs. Cub Elecparts | Tung Thih vs. Hu Lane Associate |
| Fubon Financial vs. Lien Chang Electronic | Fubon Financial vs. Taisol Electronics Co | Fubon Financial vs. Tung Thih Electronic | Fubon Financial vs. WT Microelectronics 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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