Correlation Between Formosa International and Arbor Technology
Can any of the company-specific risk be diversified away by investing in both Formosa International and Arbor 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 Arbor 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 Arbor Technology, you can compare the effects of market volatilities on Formosa International and Arbor 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 Arbor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa International and Arbor Technology.
Diversification Opportunities for Formosa International and Arbor Technology
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Formosa and Arbor is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Formosa International Hotels and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor 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 Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Formosa International i.e., Formosa International and Arbor Technology go up and down completely randomly.
Pair Corralation between Formosa International and Arbor Technology
Assuming the 90 days trading horizon Formosa International Hotels is expected to under-perform the Arbor Technology. But the stock apears to be less risky and, when comparing its historical volatility, Formosa International Hotels is 1.47 times less risky than Arbor Technology. The stock trades about -0.07 of its potential returns per unit of risk. The Arbor Technology is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 5,700 in Arbor Technology on September 2, 2024 and sell it today you would lose (1,110) from holding Arbor Technology or give up 19.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa International Hotels vs. Arbor Technology
Performance |
| Timeline |
| Formosa International |
| Arbor Technology |
Formosa International and Arbor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa International and Arbor Technology
The main advantage of trading using opposite Formosa International and Arbor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa International position performs unexpectedly, Arbor 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 Arbor Technology will offset losses from the drop in Arbor 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 |
| Arbor Technology vs. Catcher Technology Co | Arbor Technology vs. Darfon Electronics Corp | Arbor Technology vs. Digital China Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |