Correlation Between YuantaP Shares and Fubon 1

Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Fubon 1 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 YuantaP Shares and Fubon 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YuantaP shares Taiwan Top and Fubon 1 3 Years, you can compare the effects of market volatilities on YuantaP Shares and Fubon 1 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 YuantaP Shares with a short position of Fubon 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Fubon 1.

Diversification Opportunities for YuantaP Shares and Fubon 1

0.17

Correlation Coefficient

YuantaP Shares  Fubon 1

Average diversification

The 3 months correlation between YuantaP and Fubon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Top and Fubon 1 3 Years in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon 1 3 and YuantaP Shares 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 YuantaP shares Taiwan Top are associated (or correlated) with Fubon 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon 1 3 has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Fubon 1 go up and down completely randomly.

Pair Corralation between YuantaP Shares and Fubon 1

Assuming the 90 days trading horizon YuantaP shares Taiwan Top is expected to under-perform the Fubon 1. In addition to that, YuantaP Shares is 4.4 times more volatile than Fubon 1 3 Years. It trades about -0.08 of its total potential returns per unit of risk. Fubon 1 3 Years is currently generating about 0.17 per unit of volatility. If you would invest  4,171  in Fubon 1 3 Years on September 12, 2024 and sell it today you would earn a total of  41.00  from holding Fubon 1 3 Years or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

YuantaP shares Taiwan Top  vs.  Fubon 1 3 Years

YuantaP shares Taiwan

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YuantaP shares Taiwan Top are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, YuantaP Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fubon 1 3

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon 1 3 Years are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fubon 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with YuantaP Shares and Fubon 1

The main advantage of trading using opposite YuantaP Shares and Fubon 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Fubon 1 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 1 will offset losses from the drop in Fubon 1's long position.

The idea behind YuantaP shares Taiwan Top and Fubon 1 3 Years pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.