Correlation Between Dynamic Medical and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Dynamic Medical 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 Dynamic Medical and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynamic Medical Technologies and Fubon Financial Holding, you can compare the effects of market volatilities on Dynamic Medical 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 Dynamic Medical with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Medical and Fubon Financial.
Diversification Opportunities for Dynamic Medical and Fubon Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dynamic and Fubon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Medical Technologies 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 Dynamic Medical 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 Dynamic Medical Technologies 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 Dynamic Medical i.e., Dynamic Medical and Fubon Financial go up and down completely randomly.
Pair Corralation between Dynamic Medical and Fubon Financial
Assuming the 90 days trading horizon Dynamic Medical Technologies is expected to under-perform the Fubon Financial. But the stock apears to be less risky and, when comparing its historical volatility, Dynamic Medical Technologies is 1.13 times less risky than Fubon Financial. The stock trades about -0.16 of its potential returns per unit of risk. The Fubon Financial Holding is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 9,160 in Fubon Financial Holding on October 12, 2024 and sell it today you would lose (170.00) from holding Fubon Financial Holding or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynamic Medical Technologies vs. Fubon Financial Holding
Performance |
| Timeline |
| Dynamic Medical Tech |
| Fubon Financial Holding |
Dynamic Medical and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynamic Medical and Fubon Financial
The main advantage of trading using opposite Dynamic Medical and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Medical 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.| Dynamic Medical vs. Weltrend Semiconductor | Dynamic Medical vs. Sinopower Semiconductor | Dynamic Medical vs. FDC International Hotels | Dynamic Medical vs. Grand Ocean Retail |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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