Correlation Between Sunnic Technology and Formosa International
Can any of the company-specific risk be diversified away by investing in both Sunnic Technology 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 Sunnic Technology and Formosa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunnic Technology Merchandise and Formosa International Hotels, you can compare the effects of market volatilities on Sunnic Technology 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 Sunnic Technology with a short position of Formosa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunnic Technology and Formosa International.
Diversification Opportunities for Sunnic Technology and Formosa International
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sunnic and Formosa is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sunnic Technology Merchandise and Formosa International Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa International and Sunnic Technology 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 Sunnic Technology Merchandise 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 Sunnic Technology i.e., Sunnic Technology and Formosa International go up and down completely randomly.
Pair Corralation between Sunnic Technology and Formosa International
Assuming the 90 days trading horizon Sunnic Technology Merchandise is expected to generate 1.79 times more return on investment than Formosa International. However, Sunnic Technology is 1.79 times more volatile than Formosa International Hotels. It trades about 0.03 of its potential returns per unit of risk. Formosa International Hotels is currently generating about -0.07 per unit of risk. 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 |
Sunnic Technology Merchandise vs. Formosa International Hotels
Performance |
| Timeline |
| Sunnic Technology |
| Formosa International |
Sunnic Technology and Formosa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunnic Technology and Formosa International
The main advantage of trading using opposite Sunnic Technology and Formosa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunnic Technology 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.| Sunnic Technology vs. Taiwan Semiconductor Manufacturing | Sunnic Technology vs. MediaTek | Sunnic Technology vs. United Microelectronics | Sunnic Technology vs. Novatek Microelectronics 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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