Correlation Between Fubon Financial and Shin Ruenn
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Shin Ruenn 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 Shin Ruenn 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 Shin Ruenn Development, you can compare the effects of market volatilities on Fubon Financial and Shin Ruenn 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 Shin Ruenn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Shin Ruenn.
Diversification Opportunities for Fubon Financial and Shin Ruenn
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Shin is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Shin Ruenn Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Ruenn Development 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 Shin Ruenn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Ruenn Development has no effect on the direction of Fubon Financial i.e., Fubon Financial and Shin Ruenn go up and down completely randomly.
Pair Corralation between Fubon Financial and Shin Ruenn
Assuming the 90 days trading horizon Fubon Financial is expected to generate 4.76 times less return on investment than Shin Ruenn. But when comparing it to its historical volatility, Fubon Financial Holding is 5.74 times less risky than Shin Ruenn. It trades about 0.03 of its potential returns per unit of risk. Shin Ruenn Development is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,800 in Shin Ruenn Development on September 13, 2024 and sell it today you would earn a total of 450.00 from holding Shin Ruenn Development or generate 7.76% 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. Shin Ruenn Development
Performance |
Timeline |
Fubon Financial Holding |
Shin Ruenn Development |
Fubon Financial and Shin Ruenn Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and Shin Ruenn
The main advantage of trading using opposite Fubon Financial and Shin Ruenn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, Shin Ruenn 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 Shin Ruenn will offset losses from the drop in Shin Ruenn'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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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