Correlation Between Formosa Sumco and Unimicron Technology
Can any of the company-specific risk be diversified away by investing in both Formosa Sumco and Unimicron 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 Sumco and Unimicron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Sumco Technology and Unimicron Technology Corp, you can compare the effects of market volatilities on Formosa Sumco and Unimicron 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 Sumco with a short position of Unimicron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Sumco and Unimicron Technology.
Diversification Opportunities for Formosa Sumco and Unimicron Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Formosa and Unimicron is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Sumco Technology and Unimicron Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unimicron Technology Corp and Formosa Sumco 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 Sumco Technology are associated (or correlated) with Unimicron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unimicron Technology Corp has no effect on the direction of Formosa Sumco i.e., Formosa Sumco and Unimicron Technology go up and down completely randomly.
Pair Corralation between Formosa Sumco and Unimicron Technology
Assuming the 90 days trading horizon Formosa Sumco Technology is expected to under-perform the Unimicron Technology. But the stock apears to be less risky and, when comparing its historical volatility, Formosa Sumco Technology is 1.41 times less risky than Unimicron Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Unimicron Technology Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 13,700 in Unimicron Technology Corp on October 25, 2024 and sell it today you would earn a total of 200.00 from holding Unimicron Technology Corp or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa Sumco Technology vs. Unimicron Technology Corp
Performance |
| Timeline |
| Formosa Sumco Technology |
| Unimicron Technology Corp |
Formosa Sumco and Unimicron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Sumco and Unimicron Technology
The main advantage of trading using opposite Formosa Sumco and Unimicron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Sumco position performs unexpectedly, Unimicron 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 Unimicron Technology will offset losses from the drop in Unimicron Technology's long position.| Formosa Sumco vs. Unimicron Technology Corp | Formosa Sumco vs. Kinsus Interconnect Technology | Formosa Sumco vs. Novatek Microelectronics Corp | Formosa Sumco vs. Delta Electronics |
| Unimicron Technology vs. Nan Ya Printed | Unimicron Technology vs. Kinsus Interconnect Technology | Unimicron Technology vs. Novatek Microelectronics Corp | Unimicron Technology vs. LARGAN Precision 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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