Correlation Between Far Eastern and Formosa Taffeta
Can any of the company-specific risk be diversified away by investing in both Far Eastern and Formosa Taffeta 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 Far Eastern and Formosa Taffeta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Far Eastern New and Formosa Taffeta Co, you can compare the effects of market volatilities on Far Eastern and Formosa Taffeta 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 Far Eastern with a short position of Formosa Taffeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Far Eastern and Formosa Taffeta.
Diversification Opportunities for Far Eastern and Formosa Taffeta
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Far and Formosa is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Far Eastern New and Formosa Taffeta Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Taffeta and Far Eastern 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 Far Eastern New are associated (or correlated) with Formosa Taffeta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Taffeta has no effect on the direction of Far Eastern i.e., Far Eastern and Formosa Taffeta go up and down completely randomly.
Pair Corralation between Far Eastern and Formosa Taffeta
Assuming the 90 days trading horizon Far Eastern New is expected to under-perform the Formosa Taffeta. In addition to that, Far Eastern is 1.43 times more volatile than Formosa Taffeta Co. It trades about -0.19 of its total potential returns per unit of risk. Formosa Taffeta Co is currently generating about 0.08 per unit of volatility. If you would invest 1,980 in Formosa Taffeta Co on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Formosa Taffeta Co or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Far Eastern New vs. Formosa Taffeta Co
Performance |
| Timeline |
| Far Eastern New |
| Formosa Taffeta |
Far Eastern and Formosa Taffeta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Far Eastern and Formosa Taffeta
The main advantage of trading using opposite Far Eastern and Formosa Taffeta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Far Eastern position performs unexpectedly, Formosa Taffeta 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 Taffeta will offset losses from the drop in Formosa Taffeta's long position.| Far Eastern vs. BES Engineering Co | Far Eastern vs. Continental Holdings Corp | Far Eastern vs. Kee Tai Properties | Far Eastern vs. Hung Sheng Construction |
| Formosa Taffeta vs. Chaintech Technology Corp | Formosa Taffeta vs. AVerMedia Technologies | Formosa Taffeta vs. Avision | Formosa Taffeta vs. Clevo 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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