Correlation Between Ping An and Fubon Financial

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

By analyzing existing cross correlation between Ping An Insurance and Fubon Financial Holding, you can compare the effects of market volatilities on Ping An and Fubon Financial 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 Ping An with a short position of Fubon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Fubon Financial.

Diversification Opportunities for Ping An and Fubon Financial

0.0

Correlation Coefficient

Ping An  Fubon Financial

Pay attention - limited upside

The 3 months correlation between Ping and Fubon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Fubon Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Financial Holding and Ping An 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 Ping An Insurance are associated (or correlated) with Fubon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Financial Holding has no effect on the direction of Ping An i.e., Ping An and Fubon Financial go up and down completely randomly.

Pair Corralation between Ping An and Fubon Financial

If you would invest  1,800  in Fubon Financial Holding on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Fubon Financial Holding or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Ping An Insurance  vs.  Fubon Financial Holding

Ping An Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ping An Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Ping An reported solid returns over the last few months and may actually be approaching a breakup point.

Fubon Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fubon Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fubon Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ping An and Fubon Financial

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

The idea behind Ping An Insurance and Fubon Financial Holding 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..