Correlation Between Formosa Chemicals and Syscom Computer
Can any of the company-specific risk be diversified away by investing in both Formosa Chemicals and Syscom Computer 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 Chemicals and Syscom Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Chemicals Fibre and Syscom Computer Engineering, you can compare the effects of market volatilities on Formosa Chemicals and Syscom Computer 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 Chemicals with a short position of Syscom Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Chemicals and Syscom Computer.
Diversification Opportunities for Formosa Chemicals and Syscom Computer
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Formosa and Syscom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Chemicals Fibre and Syscom Computer Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syscom Computer Engi and Formosa Chemicals 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 Chemicals Fibre are associated (or correlated) with Syscom Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syscom Computer Engi has no effect on the direction of Formosa Chemicals i.e., Formosa Chemicals and Syscom Computer go up and down completely randomly.
Pair Corralation between Formosa Chemicals and Syscom Computer
Assuming the 90 days trading horizon Formosa Chemicals Fibre is expected to under-perform the Syscom Computer. In addition to that, Formosa Chemicals is 1.25 times more volatile than Syscom Computer Engineering. It trades about -0.32 of its total potential returns per unit of risk. Syscom Computer Engineering is currently generating about -0.17 per unit of volatility. If you would invest 5,510 in Syscom Computer Engineering on September 4, 2024 and sell it today you would lose (300.00) from holding Syscom Computer Engineering or give up 5.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa Chemicals Fibre vs. Syscom Computer Engineering
Performance |
| Timeline |
| Formosa Chemicals Fibre |
| Syscom Computer Engi |
Formosa Chemicals and Syscom Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Chemicals and Syscom Computer
The main advantage of trading using opposite Formosa Chemicals and Syscom Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Chemicals position performs unexpectedly, Syscom Computer 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 Syscom Computer will offset losses from the drop in Syscom Computer's long position.| Formosa Chemicals vs. Formosa Plastics Corp | Formosa Chemicals vs. Nan Ya Plastics | Formosa Chemicals vs. Formosa Petrochemical Corp | Formosa Chemicals vs. Cathay Financial Holding |
| Syscom Computer vs. Taiwan Semiconductor Manufacturing | Syscom Computer vs. Yang Ming Marine | Syscom Computer vs. ASE Industrial Holding | Syscom Computer vs. AU Optronics |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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