Correlation Between Fubon MSCI and Symtek Automation

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

By analyzing existing cross correlation between Fubon MSCI Taiwan and Symtek Automation Asia, you can compare the effects of market volatilities on Fubon MSCI and Symtek Automation 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 Fubon MSCI with a short position of Symtek Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Symtek Automation.

Diversification Opportunities for Fubon MSCI and Symtek Automation

0.86

Correlation Coefficient

Fubon MSCI  Symtek Automation

Very poor diversification

The 3 months correlation between Fubon and Symtek is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Symtek Automation Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symtek Automation Asia and Fubon MSCI 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 Fubon MSCI Taiwan are associated (or correlated) with Symtek Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symtek Automation Asia has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Symtek Automation go up and down completely randomly.

Pair Corralation between Fubon MSCI and Symtek Automation

Assuming the 90 days trading horizon Fubon MSCI is expected to generate 17.21 times less return on investment than Symtek Automation. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 2.71 times less risky than Symtek Automation. It trades about 0.04 of its potential returns per unit of risk. Symtek Automation Asia is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  12,300  in Symtek Automation Asia on September 2, 2024 and sell it today you would earn a total of  8,900  from holding Symtek Automation Asia or generate 72.36% return on investment over 90 days.

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

Fubon MSCI Taiwan  vs.  Symtek Automation Asia

Fubon MSCI Taiwan

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon MSCI Taiwan are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Fubon MSCI is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Symtek Automation Asia

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Symtek Automation Asia are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Symtek Automation showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fubon MSCI and Symtek Automation

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

The idea behind Fubon MSCI Taiwan and Symtek Automation Asia 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.