Correlation Between Orient Semiconductor and Formosa Advanced
Can any of the company-specific risk be diversified away by investing in both Orient Semiconductor and Formosa Advanced 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 Orient Semiconductor and Formosa Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orient Semiconductor Electronics and Formosa Advanced Technologies, you can compare the effects of market volatilities on Orient Semiconductor and Formosa Advanced 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 Orient Semiconductor with a short position of Formosa Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Semiconductor and Formosa Advanced.
Diversification Opportunities for Orient Semiconductor and Formosa Advanced
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orient and Formosa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Orient Semiconductor Electroni and Formosa Advanced Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Advanced Tec and Orient Semiconductor 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 Orient Semiconductor Electronics are associated (or correlated) with Formosa Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Advanced Tec has no effect on the direction of Orient Semiconductor i.e., Orient Semiconductor and Formosa Advanced go up and down completely randomly.
Pair Corralation between Orient Semiconductor and Formosa Advanced
Assuming the 90 days trading horizon Orient Semiconductor Electronics is expected to generate 3.23 times more return on investment than Formosa Advanced. However, Orient Semiconductor is 3.23 times more volatile than Formosa Advanced Technologies. It trades about 0.06 of its potential returns per unit of risk. Formosa Advanced Technologies is currently generating about -0.05 per unit of risk. If you would invest 1,760 in Orient Semiconductor Electronics on September 13, 2024 and sell it today you would earn a total of 1,830 from holding Orient Semiconductor Electronics or generate 103.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orient Semiconductor Electroni vs. Formosa Advanced Technologies
Performance |
| Timeline |
| Orient Semiconductor |
| Formosa Advanced Tec |
Orient Semiconductor and Formosa Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orient Semiconductor and Formosa Advanced
The main advantage of trading using opposite Orient Semiconductor and Formosa Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orient Semiconductor position performs unexpectedly, Formosa Advanced 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 Advanced will offset losses from the drop in Formosa Advanced's long position.| Orient Semiconductor vs. AU Optronics | Orient Semiconductor vs. Innolux Corp | Orient Semiconductor vs. Ruentex Development Co | Orient Semiconductor vs. WiseChip Semiconductor |
| Formosa Advanced vs. Powertech Technology | Formosa Advanced vs. Greatek Electronics | Formosa Advanced vs. Sigurd Microelectronics Corp | Formosa Advanced vs. King Yuan Electronics |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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