Correlation Between Formosa International and Sunnic Technology
Can any of the company-specific risk be diversified away by investing in both Formosa International and Sunnic Technology 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 Sunnic Technology 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 Sunnic Technology Merchandise, you can compare the effects of market volatilities on Formosa International and Sunnic Technology 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 Sunnic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa International and Sunnic Technology.
Diversification Opportunities for Formosa International and Sunnic Technology
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Formosa and Sunnic is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Formosa International Hotels and Sunnic Technology Merchandise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunnic 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 Sunnic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunnic Technology has no effect on the direction of Formosa International i.e., Formosa International and Sunnic Technology go up and down completely randomly.
Pair Corralation between Formosa International and Sunnic Technology
Assuming the 90 days trading horizon Formosa International Hotels is expected to under-perform the Sunnic Technology. But the stock apears to be less risky and, when comparing its historical volatility, Formosa International Hotels is 1.79 times less risky than Sunnic Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Sunnic Technology Merchandise is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,391 in Sunnic Technology Merchandise on September 2, 2024 and sell it today you would earn a total of 179.00 from holding Sunnic Technology Merchandise or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa International Hotels vs. Sunnic Technology Merchandise
Performance |
| Timeline |
| Formosa International |
| Sunnic Technology |
Formosa International and Sunnic Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa International and Sunnic Technology
The main advantage of trading using opposite Formosa International and Sunnic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa International position performs unexpectedly, Sunnic Technology 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 Sunnic Technology will offset losses from the drop in Sunnic Technology'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 |
| Sunnic Technology vs. Taiwan Semiconductor Manufacturing | Sunnic Technology vs. MediaTek | Sunnic Technology vs. United Microelectronics | Sunnic Technology vs. Novatek Microelectronics Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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