Correlation Between Formosa Sumco and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Formosa Sumco and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Formosa Sumco and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Sumco and Dow Jones.
Diversification Opportunities for Formosa Sumco and Dow Jones
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Formosa and Dow is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Sumco Technology and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Formosa Sumco i.e., Formosa Sumco and Dow Jones go up and down completely randomly.
Pair Corralation between Formosa Sumco and Dow Jones
Assuming the 90 days trading horizon Formosa Sumco Technology is expected to under-perform the Dow Jones. In addition to that, Formosa Sumco is 2.86 times more volatile than Dow Jones Industrial. It trades about -0.23 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 per unit of volatility. If you would invest 4,329,703 in Dow Jones Industrial on October 25, 2024 and sell it today you would earn a total of 126,804 from holding Dow Jones Industrial or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Formosa Sumco Technology vs. Dow Jones Industrial
Performance |
| Timeline |
Formosa Sumco and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Formosa Sumco Technology
Pair trading matchups for Formosa Sumco
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Formosa Sumco and Dow Jones
The main advantage of trading using opposite Formosa Sumco and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Sumco position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' 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 |
| Dow Jones vs. Xiabuxiabu Catering Management | Dow Jones vs. Neogen | Dow Jones vs. Orion Office Reit | Dow Jones vs. Bassett Furniture Industries |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |