Correlation Between GeneFerm Biotechnology and Formosa Optical
Can any of the company-specific risk be diversified away by investing in both GeneFerm Biotechnology and Formosa Optical 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 GeneFerm Biotechnology and Formosa Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeneFerm Biotechnology Co and Formosa Optical Technology, you can compare the effects of market volatilities on GeneFerm Biotechnology and Formosa Optical 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 GeneFerm Biotechnology with a short position of Formosa Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeneFerm Biotechnology and Formosa Optical.
Diversification Opportunities for GeneFerm Biotechnology and Formosa Optical
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GeneFerm and Formosa is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding GeneFerm Biotechnology Co and Formosa Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Optical Tech and GeneFerm Biotechnology 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 GeneFerm Biotechnology Co are associated (or correlated) with Formosa Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Optical Tech has no effect on the direction of GeneFerm Biotechnology i.e., GeneFerm Biotechnology and Formosa Optical go up and down completely randomly.
Pair Corralation between GeneFerm Biotechnology and Formosa Optical
Assuming the 90 days trading horizon GeneFerm Biotechnology Co is expected to under-perform the Formosa Optical. In addition to that, GeneFerm Biotechnology is 2.39 times more volatile than Formosa Optical Technology. It trades about -0.21 of its total potential returns per unit of risk. Formosa Optical Technology is currently generating about 0.13 per unit of volatility. If you would invest 10,850 in Formosa Optical Technology on October 25, 2024 and sell it today you would earn a total of 250.00 from holding Formosa Optical Technology or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GeneFerm Biotechnology Co vs. Formosa Optical Technology
Performance |
| Timeline |
| GeneFerm Biotechnology |
| Formosa Optical Tech |
GeneFerm Biotechnology and Formosa Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GeneFerm Biotechnology and Formosa Optical
The main advantage of trading using opposite GeneFerm Biotechnology and Formosa Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeneFerm Biotechnology position performs unexpectedly, Formosa Optical 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 Optical will offset losses from the drop in Formosa Optical's long position.| GeneFerm Biotechnology vs. Lotus Pharmaceutical Co | GeneFerm Biotechnology vs. Center Laboratories | GeneFerm Biotechnology vs. Synmosa Biopharma | GeneFerm Biotechnology vs. Foresee Pharmaceuticals Co |
| Formosa Optical vs. Quintain Steel Co | Formosa Optical vs. Tung Ho Steel | Formosa Optical vs. GeneFerm Biotechnology Co | Formosa Optical vs. Genovate Biotechnology 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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