Correlation Between San Fu and Formosan Union
Can any of the company-specific risk be diversified away by investing in both San Fu and Formosan Union 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 San Fu and Formosan Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Fu Chemical and Formosan Union Chemical, you can compare the effects of market volatilities on San Fu and Formosan Union 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 San Fu with a short position of Formosan Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Fu and Formosan Union.
Diversification Opportunities for San Fu and Formosan Union
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between San and Formosan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding San Fu Chemical and Formosan Union Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosan Union Chemical and San Fu 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 San Fu Chemical are associated (or correlated) with Formosan Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosan Union Chemical has no effect on the direction of San Fu i.e., San Fu and Formosan Union go up and down completely randomly.
Pair Corralation between San Fu and Formosan Union
Assuming the 90 days trading horizon San Fu Chemical is expected to under-perform the Formosan Union. In addition to that, San Fu is 1.29 times more volatile than Formosan Union Chemical. It trades about -0.01 of its total potential returns per unit of risk. Formosan Union Chemical is currently generating about 0.35 per unit of volatility. If you would invest 2,020 in Formosan Union Chemical on December 1, 2024 and sell it today you would earn a total of 145.00 from holding Formosan Union Chemical or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
San Fu Chemical vs. Formosan Union Chemical
Performance |
| Timeline |
| San Fu Chemical |
| Formosan Union Chemical |
San Fu and Formosan Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Fu and Formosan Union
The main advantage of trading using opposite San Fu and Formosan Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Fu position performs unexpectedly, Formosan Union 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 Formosan Union will offset losses from the drop in Formosan Union's long position.| San Fu vs. Nuvoton Technology Corp | San Fu vs. Shiny Chemical Industrial | San Fu vs. Jinan Acetate Chemical | San Fu vs. Coremax Corp |
| Formosan Union vs. Oriental Union Chemical | Formosan Union vs. Everlight Chemical Industrial | Formosan Union vs. China Man Made Fiber | Formosan Union vs. Ho Tung Chemical |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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