Correlation Between Fubon Financial and Apex Science

Can any of the company-specific risk be diversified away by investing in both Fubon Financial and Apex Science 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 Apex Science 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 Apex Science Engineering, you can compare the effects of market volatilities on Fubon Financial and Apex Science 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 Apex Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Apex Science.

Diversification Opportunities for Fubon Financial and Apex Science

0.69

Correlation Coefficient

Fubon Financial  Apex Science

Poor diversification

The 3 months correlation between Fubon and Apex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Apex Science Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Science Engineering 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 Apex Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Science Engineering has no effect on the direction of Fubon Financial i.e., Fubon Financial and Apex Science go up and down completely randomly.

Pair Corralation between Fubon Financial and Apex Science

Assuming the 90 days trading horizon Fubon Financial is expected to generate 11.73 times less return on investment than Apex Science. But when comparing it to its historical volatility, Fubon Financial Holding is 4.57 times less risky than Apex Science. It trades about 0.02 of its potential returns per unit of risk. Apex Science Engineering is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  975.00  in Apex Science Engineering on January 31, 2024 and sell it today you would earn a total of  390.00  from holding Apex Science Engineering or generate 40.0% return on investment over 90 days.

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

Fubon Financial Holding  vs.  Apex Science Engineering

Fubon Financial Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fubon Financial Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fubon Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apex Science Engineering

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Science Engineering are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Apex Science showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fubon Financial and Apex Science

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

The idea behind Fubon Financial Holding and Apex Science Engineering 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.