Correlation Between Formosan Union and Shinkong Synthetic
Can any of the company-specific risk be diversified away by investing in both Formosan Union and Shinkong Synthetic 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 Formosan Union and Shinkong Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosan Union Chemical and Shinkong Synthetic Fiber, you can compare the effects of market volatilities on Formosan Union and Shinkong Synthetic 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 Formosan Union with a short position of Shinkong Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosan Union and Shinkong Synthetic.
Diversification Opportunities for Formosan Union and Shinkong Synthetic
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formosan and Shinkong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Formosan Union Chemical and Shinkong Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinkong Synthetic Fiber and Formosan Union 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 Formosan Union Chemical are associated (or correlated) with Shinkong Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinkong Synthetic Fiber has no effect on the direction of Formosan Union i.e., Formosan Union and Shinkong Synthetic go up and down completely randomly.
Pair Corralation between Formosan Union and Shinkong Synthetic
Assuming the 90 days trading horizon Formosan Union is expected to generate 1.11 times less return on investment than Shinkong Synthetic. In addition to that, Formosan Union is 1.11 times more volatile than Shinkong Synthetic Fiber. It trades about 0.02 of its total potential returns per unit of risk. Shinkong Synthetic Fiber is currently generating about 0.02 per unit of volatility. If you would invest 1,535 in Shinkong Synthetic Fiber on September 1, 2024 and sell it today you would earn a total of 70.00 from holding Shinkong Synthetic Fiber or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosan Union Chemical vs. Shinkong Synthetic Fiber
Performance |
| Timeline |
| Formosan Union Chemical |
| Shinkong Synthetic Fiber |
Formosan Union and Shinkong Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosan Union and Shinkong Synthetic
The main advantage of trading using opposite Formosan Union and Shinkong Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosan Union position performs unexpectedly, Shinkong Synthetic 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 Shinkong Synthetic will offset losses from the drop in Shinkong Synthetic's long position.| Formosan Union vs. Oriental Union Chemical | Formosan Union vs. Everlight Chemical Industrial | Formosan Union vs. China Man Made Fiber | Formosan Union vs. Ho Tung Chemical |
| Shinkong Synthetic vs. Basso Industry Corp | Shinkong Synthetic vs. Chung Hsin Electric Machinery | Shinkong Synthetic vs. TYC Brother Industrial | Shinkong Synthetic vs. TECO Electric Machinery |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |