Correlation Between Chaintech Technology and Formosa Taffeta
Can any of the company-specific risk be diversified away by investing in both Chaintech Technology 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 Chaintech Technology and Formosa Taffeta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chaintech Technology Corp and Formosa Taffeta Co, you can compare the effects of market volatilities on Chaintech Technology 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 Chaintech Technology with a short position of Formosa Taffeta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaintech Technology and Formosa Taffeta.
Diversification Opportunities for Chaintech Technology and Formosa Taffeta
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chaintech and Formosa is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chaintech Technology Corp and Formosa Taffeta Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Taffeta and Chaintech Technology 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 Chaintech Technology Corp 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 Chaintech Technology i.e., Chaintech Technology and Formosa Taffeta go up and down completely randomly.
Pair Corralation between Chaintech Technology and Formosa Taffeta
Assuming the 90 days trading horizon Chaintech Technology Corp is expected to generate 3.14 times more return on investment than Formosa Taffeta. However, Chaintech Technology is 3.14 times more volatile than Formosa Taffeta Co. It trades about 0.03 of its potential returns per unit of risk. Formosa Taffeta Co is currently generating about -0.07 per unit of risk. If you would invest 3,095 in Chaintech Technology Corp on August 31, 2024 and sell it today you would earn a total of 695.00 from holding Chaintech Technology Corp or generate 22.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Chaintech Technology Corp vs. Formosa Taffeta Co
Performance |
| Timeline |
| Chaintech Technology Corp |
| Formosa Taffeta |
Chaintech Technology and Formosa Taffeta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chaintech Technology and Formosa Taffeta
The main advantage of trading using opposite Chaintech Technology and Formosa Taffeta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaintech Technology 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.| Chaintech Technology vs. Biostar Microtech International | Chaintech Technology vs. Elitegroup Computer Systems | Chaintech Technology vs. Shuttle | Chaintech Technology vs. Gigabyte Technology Co |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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