Correlation Between Formosa International and Syscom Computer
Can any of the company-specific risk be diversified away by investing in both Formosa International and Syscom 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 Syscom 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 Syscom Computer Engineering, you can compare the effects of market volatilities on Formosa International and Syscom 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 Syscom Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa International and Syscom Computer.
Diversification Opportunities for Formosa International and Syscom Computer
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Formosa and Syscom is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Formosa International Hotels and Syscom Computer Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syscom Computer Engi 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 Syscom Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syscom Computer Engi has no effect on the direction of Formosa International i.e., Formosa International and Syscom Computer go up and down completely randomly.
Pair Corralation between Formosa International and Syscom Computer
Assuming the 90 days trading horizon Formosa International Hotels is expected to generate 0.42 times more return on investment than Syscom Computer. However, Formosa International Hotels is 2.35 times less risky than Syscom Computer. It trades about -0.32 of its potential returns per unit of risk. Syscom Computer Engineering is currently generating about -0.2 per unit of risk. If you would invest 20,150 in Formosa International Hotels on September 3, 2024 and sell it today you would lose (850.00) from holding Formosa International Hotels or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa International Hotels vs. Syscom Computer Engineering
Performance |
| Timeline |
| Formosa International |
| Syscom Computer Engi |
Formosa International and Syscom Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa International and Syscom Computer
The main advantage of trading using opposite Formosa International and Syscom Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa International position performs unexpectedly, Syscom 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 Syscom Computer will offset losses from the drop in Syscom 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 |
| Syscom Computer vs. Ares International Corp | Syscom Computer vs. Stark Technology | Syscom Computer vs. Audix Corp | Syscom Computer vs. Fortune Information Systems |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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