Correlation Between YuantaP Shares and Formosa Optical
Can any of the company-specific risk be diversified away by investing in both YuantaP Shares and Formosa Optical 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 YuantaP Shares and Formosa Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between YuantaP shares Taiwan Mid Cap and Formosa Optical Technology, you can compare the effects of market volatilities on YuantaP Shares and Formosa Optical 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 YuantaP Shares with a short position of Formosa Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of YuantaP Shares and Formosa Optical.
Diversification Opportunities for YuantaP Shares and Formosa Optical
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between YuantaP and Formosa is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding YuantaP shares Taiwan Mid Cap and Formosa Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Optical Tech and YuantaP Shares 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 YuantaP shares Taiwan Mid Cap are associated (or correlated) with Formosa Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Optical Tech has no effect on the direction of YuantaP Shares i.e., YuantaP Shares and Formosa Optical go up and down completely randomly.
Pair Corralation between YuantaP Shares and Formosa Optical
Assuming the 90 days trading horizon YuantaP shares Taiwan Mid Cap is expected to under-perform the Formosa Optical. In addition to that, YuantaP Shares is 1.02 times more volatile than Formosa Optical Technology. It trades about -0.17 of its total potential returns per unit of risk. Formosa Optical Technology is currently generating about 0.27 per unit of volatility. If you would invest 10,100 in Formosa Optical Technology on September 2, 2024 and sell it today you would earn a total of 700.00 from holding Formosa Optical Technology or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
YuantaP shares Taiwan Mid Cap vs. Formosa Optical Technology
Performance |
| Timeline |
| YuantaP shares Taiwan |
| Formosa Optical Tech |
YuantaP Shares and Formosa Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with YuantaP Shares and Formosa Optical
The main advantage of trading using opposite YuantaP Shares and Formosa Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if YuantaP Shares position performs unexpectedly, Formosa Optical 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 Formosa Optical will offset losses from the drop in Formosa Optical's long position.| YuantaP Shares vs. YuantaP shares Taiwan Top | YuantaP Shares vs. YuantaP shares MSCI Taiwan | YuantaP Shares vs. YuantaP shares Taiwan GreTai | YuantaP Shares vs. YuantaP shares SSE50 |
| Formosa Optical vs. Shan Loong Transportation Co | Formosa Optical vs. Roundtop Machinery Industries | Formosa Optical vs. Asia Metal Industries | Formosa Optical vs. Chernan Metal Industrial |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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