Correlation Between Taiwan Weighted and Fubon Financial
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted 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 Taiwan Weighted and Fubon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Fubon Financial Holding, you can compare the effects of market volatilities on Taiwan Weighted 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 Taiwan Weighted with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Fubon Financial.
Diversification Opportunities for Taiwan Weighted and Fubon Financial
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Fubon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted 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 Taiwan Weighted 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 Taiwan Weighted 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 Taiwan Weighted i.e., Taiwan Weighted and Fubon Financial go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Fubon Financial
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 3.53 times more return on investment than Fubon Financial. However, Taiwan Weighted is 3.53 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 0.0 per unit of risk. If you would invest 1,569,957 in Taiwan Weighted on August 29, 2024 and sell it today you would earn a total of 697,919 from holding Taiwan Weighted or generate 44.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.45% |
| Values | Daily Returns |
Taiwan Weighted vs. Fubon Financial Holding
Performance |
| Timeline |
Taiwan Weighted and Fubon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Fubon Financial Holding
Pair trading matchups for Fubon Financial
Pair Trading with Taiwan Weighted and Fubon Financial
The main advantage of trading using opposite Taiwan Weighted and Fubon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted 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.| Taiwan Weighted vs. Kworld Computer Co | Taiwan Weighted vs. FDC International Hotels | Taiwan Weighted vs. Wonderful Hi Tech Co | Taiwan Weighted vs. Landis Taipei Hotel |
| Fubon Financial vs. YuantaP shares Taiwan Top | Fubon Financial vs. YuantaP shares Taiwan Mid Cap | Fubon Financial vs. YuantaP shares Taiwan Electronics | Fubon Financial vs. Fubon MSCI Taiwan |
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 CEOs Directory module to screen CEOs from public companies around the world.
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