Correlation Between Fubon Financial and GMI Technology
Can any of the company-specific risk be diversified away by investing in both Fubon Financial and GMI Technology 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 GMI Technology 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 GMI Technology, you can compare the effects of market volatilities on Fubon Financial and GMI Technology 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 GMI Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and GMI Technology.
Diversification Opportunities for Fubon Financial and GMI Technology
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fubon and GMI is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and GMI Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMI Technology 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 GMI Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMI Technology has no effect on the direction of Fubon Financial i.e., Fubon Financial and GMI Technology go up and down completely randomly.
Pair Corralation between Fubon Financial and GMI Technology
Assuming the 90 days trading horizon Fubon Financial Holding is expected to generate 0.05 times more return on investment than GMI Technology. However, Fubon Financial Holding is 18.29 times less risky than GMI Technology. It trades about 0.3 of its potential returns per unit of risk. GMI Technology is currently generating about -0.19 per unit of risk. If you would invest 5,870 in Fubon Financial Holding on September 12, 2024 and sell it today you would earn a total of 140.00 from holding Fubon Financial Holding or generate 2.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fubon Financial Holding vs. GMI Technology
Performance |
Timeline |
Fubon Financial Holding |
GMI Technology |
Fubon Financial and GMI Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fubon Financial and GMI Technology
The main advantage of trading using opposite Fubon Financial and GMI Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon Financial position performs unexpectedly, GMI Technology 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 GMI Technology will offset losses from the drop in GMI Technology's long position.Fubon Financial vs. CTBC Financial Holding | Fubon Financial vs. YuantaP shares Taiwan Mid Cap | Fubon Financial vs. YuantaP shares Taiwan Electronics | Fubon Financial vs. Fubon MSCI Taiwan |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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