Correlation Between Fubon MSCI and Hitron Technologies

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

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

Diversification Opportunities for Fubon MSCI and Hitron Technologies

-0.38

Correlation Coefficient

Fubon MSCI  Hitron Technologies

Very good diversification

The 3 months correlation between Fubon and Hitron is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Hitron Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitron Technologies and Fubon MSCI 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 MSCI Taiwan are associated (or correlated) with Hitron Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitron Technologies has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Hitron Technologies go up and down completely randomly.

Pair Corralation between Fubon MSCI and Hitron Technologies

Assuming the 90 days trading horizon Fubon MSCI is expected to generate 2.0 times less return on investment than Hitron Technologies. But when comparing it to its historical volatility, Fubon MSCI Taiwan is 2.49 times less risky than Hitron Technologies. It trades about 0.06 of its potential returns per unit of risk. Hitron Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,881  in Hitron Technologies on January 31, 2024 and sell it today you would earn a total of  1,139  from holding Hitron Technologies or generate 60.55% return on investment over 90 days.

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

Fubon MSCI Taiwan  vs.  Hitron Technologies

Fubon MSCI Taiwan

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon MSCI Taiwan are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fubon MSCI showed solid returns over the last few months and may actually be approaching a breakup point.

Hitron Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hitron Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Fubon MSCI and Hitron Technologies

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

The idea behind Fubon MSCI Taiwan and Hitron Technologies 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.