Correlation Between Formosa International and Min Aik
Can any of the company-specific risk be diversified away by investing in both Formosa International and Min Aik 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 Min Aik 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 Min Aik Technology, you can compare the effects of market volatilities on Formosa International and Min Aik 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 Min Aik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa International and Min Aik.
Diversification Opportunities for Formosa International and Min Aik
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formosa and Min is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Formosa International Hotels and Min Aik Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Min Aik Technology 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 Min Aik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Min Aik Technology has no effect on the direction of Formosa International i.e., Formosa International and Min Aik go up and down completely randomly.
Pair Corralation between Formosa International and Min Aik
Assuming the 90 days trading horizon Formosa International Hotels is expected to under-perform the Min Aik. But the stock apears to be less risky and, when comparing its historical volatility, Formosa International Hotels is 1.79 times less risky than Min Aik. The stock trades about -0.07 of its potential returns per unit of risk. The Min Aik Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,715 in Min Aik Technology on September 2, 2024 and sell it today you would earn a total of 635.00 from holding Min Aik Technology or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Formosa International Hotels vs. Min Aik Technology
Performance |
| Timeline |
| Formosa International |
| Min Aik Technology |
Formosa International and Min Aik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa International and Min Aik
The main advantage of trading using opposite Formosa International and Min Aik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa International position performs unexpectedly, Min Aik 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 Min Aik will offset losses from the drop in Min Aik's long position.| Formosa International vs. President Chain Store | Formosa International vs. Uni President Enterprises Corp | Formosa International vs. Ambassador Hotel | Formosa International vs. Hotai Motor 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 CEOs Directory module to screen CEOs from public companies around the world.
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