Correlation Between China Times and Fubon Taiwan
Can any of the company-specific risk be diversified away by investing in both China Times 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 China Times and Fubon Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Times Publishing and Fubon Taiwan Technology, you can compare the effects of market volatilities on China Times 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 China Times with a short position of Fubon Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Times and Fubon Taiwan.
Diversification Opportunities for China Times and Fubon Taiwan
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Fubon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding China Times Publishing 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 China Times 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 China Times Publishing 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 China Times i.e., China Times and Fubon Taiwan go up and down completely randomly.
Pair Corralation between China Times and Fubon Taiwan
Assuming the 90 days trading horizon China Times Publishing is expected to under-perform the Fubon Taiwan. In addition to that, China Times is 2.9 times more volatile than Fubon Taiwan Technology. It trades about -0.01 of its total potential returns per unit of risk. Fubon Taiwan Technology is currently generating about 0.05 per unit of volatility. If you would invest 17,705 in Fubon Taiwan Technology on September 2, 2024 and sell it today you would earn a total of 685.00 from holding Fubon Taiwan Technology or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
China Times Publishing vs. Fubon Taiwan Technology
Performance |
| Timeline |
| China Times Publishing |
| Fubon Taiwan Technology |
China Times and Fubon Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Times and Fubon Taiwan
The main advantage of trading using opposite China Times and Fubon Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Times 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.| China Times vs. Chinese Maritime Transport | China Times vs. Asia Metal Industries | China Times vs. China Metal Products | China Times vs. Tehmag Foods |
| Fubon Taiwan vs. Taiwan Taomee Co | Fubon Taiwan vs. AP Memory Technology | Fubon Taiwan vs. RichWave Technology Corp | Fubon Taiwan vs. Fitipower Integrated Technology |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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