Correlation Between Hunya Foods and Formosa Petrochemical
Can any of the company-specific risk be diversified away by investing in both Hunya Foods and Formosa Petrochemical 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 Hunya Foods and Formosa Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hunya Foods Co and Formosa Petrochemical Corp, you can compare the effects of market volatilities on Hunya Foods and Formosa Petrochemical 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 Hunya Foods with a short position of Formosa Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunya Foods and Formosa Petrochemical.
Diversification Opportunities for Hunya Foods and Formosa Petrochemical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hunya and Formosa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hunya Foods Co and Formosa Petrochemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Petrochemical and Hunya Foods 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 Hunya Foods Co are associated (or correlated) with Formosa Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Petrochemical has no effect on the direction of Hunya Foods i.e., Hunya Foods and Formosa Petrochemical go up and down completely randomly.
Pair Corralation between Hunya Foods and Formosa Petrochemical
Assuming the 90 days trading horizon Hunya Foods Co is expected to generate 0.42 times more return on investment than Formosa Petrochemical. However, Hunya Foods Co is 2.38 times less risky than Formosa Petrochemical. It trades about 0.0 of its potential returns per unit of risk. Formosa Petrochemical Corp is currently generating about -0.44 per unit of risk. If you would invest 2,320 in Hunya Foods Co on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Hunya Foods Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hunya Foods Co vs. Formosa Petrochemical Corp
Performance |
| Timeline |
| Hunya Foods |
| Formosa Petrochemical |
Hunya Foods and Formosa Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hunya Foods and Formosa Petrochemical
The main advantage of trading using opposite Hunya Foods and Formosa Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hunya Foods position performs unexpectedly, Formosa Petrochemical 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 Petrochemical will offset losses from the drop in Formosa Petrochemical's long position.| Hunya Foods vs. De Licacy Industrial | Hunya Foods vs. Wisher Industrial Co | Hunya Foods vs. Tainan Enterprises Co |
| Formosa Petrochemical vs. Asmedia Technology | Formosa Petrochemical vs. U Ming Marine Transport | Formosa Petrochemical vs. Cleanaway Co | Formosa Petrochemical vs. Evergreen International Storage |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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