Correlation Between Fubon Financial and Chin Poon
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Chin Poon 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 Financial and Chin Poon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon Financial Holding and Chin Poon Industrial Co, you can compare the effects of market volatilities on Fubon Financial and Chin Poon 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 Financial with a short position of Chin Poon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Chin Poon.
Diversification Opportunities for Fubon Financial and Chin Poon
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Chin is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Chin Poon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Poon Industrial and Fubon Financial 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 Financial Holding are associated (or correlated) with Chin Poon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Poon Industrial has no effect on the direction of Fubon Financial i.e., Fubon Financial and Chin Poon go up and down completely randomly.
Pair Corralation between Fubon Financial and Chin Poon
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.07 times more return on investment than Chin Poon. However, Fubon Financial Holding is 14.66 times less risky than Chin Poon. It trades about 0.34 of its potential returns per unit of risk. Chin Poon Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 6,180 in Fubon Financial Holding on September 11, 2024 and sell it today you would earn a total of 130.00 from holding Fubon Financial Holding or generate 2.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fubon Financial Holding vs. Chin Poon Industrial Co
Performance |
Timeline |
Fubon Financial Holding |
Chin Poon Industrial |
Fubon Financial and Chin Poon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and Chin Poon
The main advantage of trading using opposite Fubon Financial and Chin Poon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Chin Poon 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 Chin Poon will offset losses from the drop in Chin Poon's long position.Fubon Financial vs. Cathay Financial Holding | Fubon Financial vs. Cathay Financial Holding | Fubon Financial vs. CTBC Financial Holding | Fubon Financial vs. Mercuries Life Insurance |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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