Correlation Between Formosa International and Analog Integrations
Can any of the company-specific risk be diversified away by investing in both Formosa International and Analog Integrations 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 Analog Integrations 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 Analog Integrations, you can compare the effects of market volatilities on Formosa International and Analog Integrations 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 Analog Integrations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa International and Analog Integrations.
Diversification Opportunities for Formosa International and Analog Integrations
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Formosa and Analog is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Formosa International Hotels and Analog Integrations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Integrations 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 Analog Integrations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Integrations has no effect on the direction of Formosa International i.e., Formosa International and Analog Integrations go up and down completely randomly.
Pair Corralation between Formosa International and Analog Integrations
Assuming the 90 days trading horizon Formosa International Hotels is expected to under-perform the Analog Integrations. But the stock apears to be less risky and, when comparing its historical volatility, Formosa International Hotels is 4.99 times less risky than Analog Integrations. The stock trades about -0.34 of its potential returns per unit of risk. The Analog Integrations is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,100 in Analog Integrations on September 13, 2024 and sell it today you would earn a total of 620.00 from holding Analog Integrations or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa International Hotels vs. Analog Integrations
Performance |
| Timeline |
| Formosa International |
| Analog Integrations |
Formosa International and Analog Integrations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa International and Analog Integrations
The main advantage of trading using opposite Formosa International and Analog Integrations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa International position performs unexpectedly, Analog Integrations 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 Analog Integrations will offset losses from the drop in Analog Integrations' long position.| Formosa International vs. Feng Tay Enterprises | Formosa International vs. Ruentex Development Co | Formosa International vs. WiseChip Semiconductor | Formosa International vs. Novatek Microelectronics Corp |
| Analog Integrations vs. Sports Gear Co | Analog Integrations vs. Newretail Co | Analog Integrations vs. Grand Ocean Retail | Analog Integrations vs. Mospec Semiconductor 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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