Correlation Between Formosa Plastics and X Legend
Can any of the company-specific risk be diversified away by investing in both Formosa Plastics and X Legend 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 Formosa Plastics and X Legend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Plastics Corp and X Legend Entertainment Co, you can compare the effects of market volatilities on Formosa Plastics and X Legend 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 Formosa Plastics with a short position of X Legend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Plastics and X Legend.
Diversification Opportunities for Formosa Plastics and X Legend
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Formosa and 4994 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Plastics Corp and X Legend Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Legend Entertainment and Formosa Plastics 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 Formosa Plastics Corp are associated (or correlated) with X Legend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Legend Entertainment has no effect on the direction of Formosa Plastics i.e., Formosa Plastics and X Legend go up and down completely randomly.
Pair Corralation between Formosa Plastics and X Legend
Assuming the 90 days trading horizon Formosa Plastics Corp is expected to generate 1.43 times more return on investment than X Legend. However, Formosa Plastics is 1.43 times more volatile than X Legend Entertainment Co. It trades about -0.14 of its potential returns per unit of risk. X Legend Entertainment Co is currently generating about -0.21 per unit of risk. If you would invest 4,050 in Formosa Plastics Corp on January 14, 2025 and sell it today you would lose (515.00) from holding Formosa Plastics Corp or give up 12.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Formosa Plastics Corp vs. X Legend Entertainment Co
Performance |
| Timeline |
| Formosa Plastics Corp |
| X Legend Entertainment |
Formosa Plastics and X Legend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Plastics and X Legend
The main advantage of trading using opposite Formosa Plastics and X Legend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Plastics position performs unexpectedly, X Legend 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 X Legend will offset losses from the drop in X Legend's long position.| Formosa Plastics vs. Nan Ya Plastics | Formosa Plastics vs. Formosa Chemicals Fibre | Formosa Plastics vs. China Steel Corp | Formosa Plastics vs. Formosa Petrochemical Corp |
| X Legend vs. Abnova Taiwan Corp | X Legend vs. Cheng Mei Materials | X Legend vs. BizLink Holding | X Legend vs. Lemtech Holdings Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |