Correlation Between Cathay Taiwan and Fubon NASDAQ

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

By analyzing existing cross correlation between Cathay Taiwan 5G and Fubon NASDAQ 100 Index, you can compare the effects of market volatilities on Cathay Taiwan and Fubon NASDAQ 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 Cathay Taiwan with a short position of Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cathay Taiwan and Fubon NASDAQ.

Diversification Opportunities for Cathay Taiwan and Fubon NASDAQ

0.0

Correlation Coefficient

Cathay Taiwan  Fubon NASDAQ

Pay attention - limited upside

The 3 months correlation between Cathay and Fubon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cathay Taiwan 5G and Fubon NASDAQ 100 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon NASDAQ 100 and Cathay Taiwan 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 Cathay Taiwan 5G are associated (or correlated) with Fubon NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon NASDAQ 100 has no effect on the direction of Cathay Taiwan i.e., Cathay Taiwan and Fubon NASDAQ go up and down completely randomly.

Pair Corralation between Cathay Taiwan and Fubon NASDAQ

If you would invest  2,104  in Cathay Taiwan 5G on May 6, 2025 and sell it today you would earn a total of  506.00  from holding Cathay Taiwan 5G or generate 24.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cathay Taiwan 5G  vs.  Fubon NASDAQ 100 Index

Cathay Taiwan 5G

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Cathay Taiwan 5G are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cathay Taiwan unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fubon NASDAQ 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon NASDAQ 100 Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fubon NASDAQ is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cathay Taiwan and Fubon NASDAQ

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

The idea behind Cathay Taiwan 5G and Fubon NASDAQ 100 Index 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.