Correlation Between Sunfar Computer and Fubon Taiwan
Can any of the company-specific risk be diversified away by investing in both Sunfar Computer and Fubon Taiwan 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 Sunfar Computer and Fubon Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunfar Computer Co and Fubon Taiwan Technology, you can compare the effects of market volatilities on Sunfar Computer and Fubon Taiwan 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 Sunfar Computer with a short position of Fubon Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfar Computer and Fubon Taiwan.
Diversification Opportunities for Sunfar Computer and Fubon Taiwan
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunfar and Fubon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sunfar Computer Co and Fubon Taiwan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Taiwan Technology and Sunfar Computer 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 Sunfar Computer Co are associated (or correlated) with Fubon Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Taiwan Technology has no effect on the direction of Sunfar Computer i.e., Sunfar Computer and Fubon Taiwan go up and down completely randomly.
Pair Corralation between Sunfar Computer and Fubon Taiwan
Assuming the 90 days trading horizon Sunfar Computer Co is expected to generate 0.37 times more return on investment than Fubon Taiwan. However, Sunfar Computer Co is 2.71 times less risky than Fubon Taiwan. It trades about -0.06 of its potential returns per unit of risk. Fubon Taiwan Technology is currently generating about -0.12 per unit of risk. If you would invest 1,600 in Sunfar Computer Co on August 31, 2024 and sell it today you would lose (10.00) from holding Sunfar Computer Co or give up 0.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunfar Computer Co vs. Fubon Taiwan Technology
Performance |
| Timeline |
| Sunfar Computer |
| Fubon Taiwan Technology |
Sunfar Computer and Fubon Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunfar Computer and Fubon Taiwan
The main advantage of trading using opposite Sunfar Computer and Fubon Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfar Computer position performs unexpectedly, Fubon Taiwan 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 Taiwan will offset losses from the drop in Fubon Taiwan's long position.| Sunfar Computer vs. Auras Technology Co | Sunfar Computer vs. TUL Corporation | Sunfar Computer vs. Space Shuttle Hi Tech |
| Fubon Taiwan vs. Sunfar Computer Co | Fubon Taiwan vs. Silicon Power Computer | Fubon Taiwan vs. FDC International Hotels | Fubon Taiwan vs. Taiwan Speciality Chemicals |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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