Correlation Between Formosan Union and Everlight Chemical
Can any of the company-specific risk be diversified away by investing in both Formosan Union and Everlight Chemical 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 Everlight Chemical 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 Everlight Chemical Industrial, you can compare the effects of market volatilities on Formosan Union and Everlight Chemical 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 Everlight Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosan Union and Everlight Chemical.
Diversification Opportunities for Formosan Union and Everlight Chemical
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Formosan and Everlight is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Formosan Union Chemical and Everlight Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Chemical 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 Everlight Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Chemical has no effect on the direction of Formosan Union i.e., Formosan Union and Everlight Chemical go up and down completely randomly.
Pair Corralation between Formosan Union and Everlight Chemical
Assuming the 90 days trading horizon Formosan Union Chemical is expected to under-perform the Everlight Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Formosan Union Chemical is 1.36 times less risky than Everlight Chemical. The stock trades about -0.02 of its potential returns per unit of risk. The Everlight Chemical Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,045 in Everlight Chemical Industrial on September 2, 2024 and sell it today you would earn a total of 210.00 from holding Everlight Chemical Industrial or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosan Union Chemical vs. Everlight Chemical Industrial
Performance |
| Timeline |
| Formosan Union Chemical |
| Everlight Chemical |
Formosan Union and Everlight Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosan Union and Everlight Chemical
The main advantage of trading using opposite Formosan Union and Everlight Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosan Union position performs unexpectedly, Everlight Chemical 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 Everlight Chemical will offset losses from the drop in Everlight Chemical's long position.| Formosan Union vs. Basso Industry Corp | Formosan Union vs. Chung Hsin Electric Machinery | Formosan Union vs. TYC Brother Industrial | Formosan Union vs. TECO Electric Machinery |
| Everlight Chemical vs. Oriental Union Chemical | Everlight Chemical vs. Ho Tung Chemical | Everlight Chemical vs. China Man Made Fiber | Everlight Chemical vs. Grand Pacific Petrochemical |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |