Correlation Between Shin Tai and Formosa Sumco
Can any of the company-specific risk be diversified away by investing in both Shin Tai and Formosa Sumco 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 Shin Tai and Formosa Sumco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Tai Industry and Formosa Sumco Technology, you can compare the effects of market volatilities on Shin Tai and Formosa Sumco 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 Shin Tai with a short position of Formosa Sumco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Tai and Formosa Sumco.
Diversification Opportunities for Shin Tai and Formosa Sumco
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shin and Formosa is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Shin Tai Industry and Formosa Sumco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Sumco Technology and Shin Tai 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 Shin Tai Industry are associated (or correlated) with Formosa Sumco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Sumco Technology has no effect on the direction of Shin Tai i.e., Shin Tai and Formosa Sumco go up and down completely randomly.
Pair Corralation between Shin Tai and Formosa Sumco
Assuming the 90 days trading horizon Shin Tai Industry is expected to generate 1.22 times more return on investment than Formosa Sumco. However, Shin Tai is 1.22 times more volatile than Formosa Sumco Technology. It trades about -0.04 of its potential returns per unit of risk. Formosa Sumco Technology is currently generating about -0.23 per unit of risk. If you would invest 8,240 in Shin Tai Industry on October 25, 2024 and sell it today you would lose (250.00) from holding Shin Tai Industry or give up 3.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Shin Tai Industry vs. Formosa Sumco Technology
Performance |
Timeline |
Shin Tai Industry |
Formosa Sumco Technology |
Shin Tai and Formosa Sumco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shin Tai and Formosa Sumco
The main advantage of trading using opposite Shin Tai and Formosa Sumco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Tai position performs unexpectedly, Formosa Sumco 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 Sumco will offset losses from the drop in Formosa Sumco's long position.Shin Tai vs. Uni President Enterprises Corp | Shin Tai vs. Taisun Enterprise Co | Shin Tai vs. AGV Products Corp | Shin Tai vs. Great Wall Enterprise |
Formosa Sumco vs. Unimicron Technology Corp | Formosa Sumco vs. Kinsus Interconnect Technology | Formosa Sumco vs. Novatek Microelectronics Corp | Formosa Sumco vs. Delta Electronics |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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