Correlation Between Min Aik and Formosa International
Can any of the company-specific risk be diversified away by investing in both Min Aik and Formosa International 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 Min Aik and Formosa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Min Aik Technology and Formosa International Hotels, you can compare the effects of market volatilities on Min Aik and Formosa International 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 Min Aik with a short position of Formosa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Formosa International.
Diversification Opportunities for Min Aik and Formosa International
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Min and Formosa is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Formosa International Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa International and Min Aik 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 Min Aik Technology are associated (or correlated) with Formosa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa International has no effect on the direction of Min Aik i.e., Min Aik and Formosa International go up and down completely randomly.
Pair Corralation between Min Aik and Formosa International
Assuming the 90 days trading horizon Min Aik Technology is expected to generate 2.99 times more return on investment than Formosa International. However, Min Aik is 2.99 times more volatile than Formosa International Hotels. It trades about 0.24 of its potential returns per unit of risk. Formosa International Hotels is currently generating about 0.11 per unit of risk. If you would invest 2,315 in Min Aik Technology on November 28, 2024 and sell it today you would earn a total of 160.00 from holding Min Aik Technology or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Min Aik Technology vs. Formosa International Hotels
Performance |
| Timeline |
| Min Aik Technology |
| Formosa International |
Min Aik and Formosa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Min Aik and Formosa International
The main advantage of trading using opposite Min Aik and Formosa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Min Aik position performs unexpectedly, Formosa International 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 International will offset losses from the drop in Formosa International's long position.| Min Aik vs. Promise Technology | Min Aik vs. Spirox Corp | Min Aik vs. Zinwell | Min Aik vs. Gigastorage Corp |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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