Correlation Between Lungyen Life and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Lungyen Life 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 Lungyen Life and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lungyen Life Service and Fubon Financial Holding, you can compare the effects of market volatilities on Lungyen Life 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 Lungyen Life with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lungyen Life and Fubon Financial.
Diversification Opportunities for Lungyen Life and Fubon Financial
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lungyen and Fubon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lungyen Life Service 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 Lungyen Life 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 Lungyen Life Service 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 Lungyen Life i.e., Lungyen Life and Fubon Financial go up and down completely randomly.
Pair Corralation between Lungyen Life and Fubon Financial
Assuming the 90 days trading horizon Lungyen Life Service is expected to under-perform the Fubon Financial. In addition to that, Lungyen Life is 11.28 times more volatile than Fubon Financial Holding. It trades about -0.17 of its total potential returns per unit of risk. Fubon Financial Holding is currently generating about 0.26 per unit of volatility. If you would invest 6,010 in Fubon Financial Holding on October 15, 2024 and sell it today you would earn a total of 40.00 from holding Fubon Financial Holding or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lungyen Life Service vs. Fubon Financial Holding
Performance |
| Timeline |
| Lungyen Life Service |
| Fubon Financial Holding |
Lungyen Life and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lungyen Life and Fubon Financial
The main advantage of trading using opposite Lungyen Life and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lungyen Life 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.| Lungyen Life vs. Da Lue International | Lungyen Life vs. Foxconn Technology Co | Lungyen Life vs. Fubon Financial Holding | Lungyen Life vs. YuantaP shares Taiwan Top |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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