Correlation Between Chernan Metal and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Chernan Metal 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 Chernan Metal and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chernan Metal Industrial and Fubon Financial Holding, you can compare the effects of market volatilities on Chernan Metal 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 Chernan Metal with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chernan Metal and Fubon Financial.
Diversification Opportunities for Chernan Metal and Fubon Financial
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chernan and Fubon is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chernan Metal Industrial 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 Chernan Metal 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 Chernan Metal Industrial 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 Chernan Metal i.e., Chernan Metal and Fubon Financial go up and down completely randomly.
Pair Corralation between Chernan Metal and Fubon Financial
Assuming the 90 days trading horizon Chernan Metal Industrial is expected to generate 16.59 times more return on investment than Fubon Financial. However, Chernan Metal is 16.59 times more volatile than Fubon Financial Holding. It trades about 0.09 of its potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.46 per unit of risk. If you would invest 3,500 in Chernan Metal Industrial on October 26, 2024 and sell it today you would earn a total of 125.00 from holding Chernan Metal Industrial or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chernan Metal Industrial vs. Fubon Financial Holding
Performance |
| Timeline |
| Chernan Metal Industrial |
| Fubon Financial Holding |
Chernan Metal and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chernan Metal and Fubon Financial
The main advantage of trading using opposite Chernan Metal and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chernan Metal 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.| Chernan Metal vs. Cypress Technology Co | Chernan Metal vs. Cleanaway Co | Chernan Metal vs. Voltronic Power Technology | Chernan Metal vs. Simple Mart Retail |
| Fubon Financial vs. Chernan Metal Industrial | Fubon Financial vs. Oceanic Beverages Co | Fubon Financial vs. Eastern Media International | Fubon Financial vs. Loop Telecommunication International |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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