Correlation Between IEI Integration and Formosa Electronic
Can any of the company-specific risk be diversified away by investing in both IEI Integration and Formosa Electronic 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 IEI Integration and Formosa Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IEI Integration Corp and Formosa Electronic Industries, you can compare the effects of market volatilities on IEI Integration and Formosa Electronic 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 IEI Integration with a short position of Formosa Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IEI Integration and Formosa Electronic.
Diversification Opportunities for IEI Integration and Formosa Electronic
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IEI and Formosa is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding IEI Integration Corp and Formosa Electronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Electronic and IEI Integration 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 IEI Integration Corp are associated (or correlated) with Formosa Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Electronic has no effect on the direction of IEI Integration i.e., IEI Integration and Formosa Electronic go up and down completely randomly.
Pair Corralation between IEI Integration and Formosa Electronic
Assuming the 90 days trading horizon IEI Integration is expected to generate 2.26 times less return on investment than Formosa Electronic. But when comparing it to its historical volatility, IEI Integration Corp is 2.93 times less risky than Formosa Electronic. It trades about 0.2 of its potential returns per unit of risk. Formosa Electronic Industries is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Formosa Electronic Industries on August 26, 2024 and sell it today you would earn a total of 635.00 from holding Formosa Electronic Industries or generate 18.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IEI Integration Corp vs. Formosa Electronic Industries
Performance |
| Timeline |
| IEI Integration Corp |
| Formosa Electronic |
IEI Integration and Formosa Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IEI Integration and Formosa Electronic
The main advantage of trading using opposite IEI Integration and Formosa Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IEI Integration position performs unexpectedly, Formosa Electronic 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 Formosa Electronic will offset losses from the drop in Formosa Electronic's long position.| IEI Integration vs. Advantech Co | IEI Integration vs. Getac Technology Corp | IEI Integration vs. Flytech Technology Co | IEI Integration vs. ADLINK Technology |
| Formosa Electronic vs. Advantech Co | Formosa Electronic vs. IEI Integration Corp | Formosa Electronic vs. Flytech Technology Co | Formosa Electronic vs. ADLINK Technology |
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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