Correlation Between Formosa International and Unitech Computer
Can any of the company-specific risk be diversified away by investing in both Formosa International and Unitech Computer 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 Formosa International and Unitech Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa International Hotels and Unitech Computer Co, you can compare the effects of market volatilities on Formosa International and Unitech Computer 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 Formosa International with a short position of Unitech Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa International and Unitech Computer.
Diversification Opportunities for Formosa International and Unitech Computer
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Formosa and Unitech is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Formosa International Hotels and Unitech Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unitech Computer and Formosa International 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 Formosa International Hotels are associated (or correlated) with Unitech Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unitech Computer has no effect on the direction of Formosa International i.e., Formosa International and Unitech Computer go up and down completely randomly.
Pair Corralation between Formosa International and Unitech Computer
Assuming the 90 days trading horizon Formosa International Hotels is expected to under-perform the Unitech Computer. In addition to that, Formosa International is 1.94 times more volatile than Unitech Computer Co. It trades about -0.02 of its total potential returns per unit of risk. Unitech Computer Co is currently generating about 0.07 per unit of volatility. If you would invest 2,841 in Unitech Computer Co on September 3, 2024 and sell it today you would earn a total of 949.00 from holding Unitech Computer Co or generate 33.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Formosa International Hotels vs. Unitech Computer Co
Performance |
| Timeline |
| Formosa International |
| Unitech Computer |
Formosa International and Unitech Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa International and Unitech Computer
The main advantage of trading using opposite Formosa International and Unitech Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa International position performs unexpectedly, Unitech Computer 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 Unitech Computer will offset losses from the drop in Unitech Computer's long position.| Formosa International vs. Tainan Spinning Co | Formosa International vs. Chia Her Industrial | Formosa International vs. WiseChip Semiconductor | Formosa International vs. Novatek Microelectronics Corp |
| Unitech Computer vs. Taiwan Semiconductor Manufacturing | Unitech Computer vs. Yang Ming Marine | Unitech Computer vs. ASE Industrial Holding | Unitech Computer vs. AU Optronics |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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