Correlation Between Taiwan Closed and Fidelity Focused

Can any of the company-specific risk be diversified away by investing in both Taiwan Closed and Fidelity Focused 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 Taiwan Closed and Fidelity Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taiwan Closed and Fidelity Focused Stock, you can compare the effects of market volatilities on Taiwan Closed and Fidelity Focused 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 Taiwan Closed with a short position of Fidelity Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Closed and Fidelity Focused.

Diversification Opportunities for Taiwan Closed and Fidelity Focused

-0.04

Correlation Coefficient

Taiwan Closed  Fidelity Focused

Good diversification

The 3 months correlation between Taiwan and Fidelity is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Closed and Fidelity Focused Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Focused Stock and Taiwan Closed 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 Taiwan Closed are associated (or correlated) with Fidelity Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Focused Stock has no effect on the direction of Taiwan Closed i.e., Taiwan Closed and Fidelity Focused go up and down completely randomly.

Pair Corralation between Taiwan Closed and Fidelity Focused

Considering the 90-day investment horizon Taiwan Closed is expected to generate 0.88 times more return on investment than Fidelity Focused. However, Taiwan Closed is 1.14 times less risky than Fidelity Focused. It trades about 0.06 of its potential returns per unit of risk. Fidelity Focused Stock is currently generating about -0.02 per unit of risk. If you would invest  4,370  in Taiwan Closed on September 20, 2024 and sell it today you would earn a total of  196.00  from holding Taiwan Closed or generate 4.49% return on investment over 90 days.

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

Taiwan Closed  vs.  Fidelity Focused Stock

Taiwan Closed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Closed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Taiwan Closed is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Fidelity Focused Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Focused Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Focused is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Taiwan Closed and Fidelity Focused

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

The idea behind Taiwan Closed and Fidelity Focused Stock 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.