Correlation Between Jinan Acetate and Formosa Optical
Can any of the company-specific risk be diversified away by investing in both Jinan Acetate and Formosa Optical 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 Jinan Acetate and Formosa Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jinan Acetate Chemical and Formosa Optical Technology, you can compare the effects of market volatilities on Jinan Acetate and Formosa Optical 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 Jinan Acetate with a short position of Formosa Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jinan Acetate and Formosa Optical.
Diversification Opportunities for Jinan Acetate and Formosa Optical
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jinan and Formosa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Jinan Acetate Chemical and Formosa Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Optical Tech and Jinan Acetate 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 Jinan Acetate Chemical are associated (or correlated) with Formosa Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Optical Tech has no effect on the direction of Jinan Acetate i.e., Jinan Acetate and Formosa Optical go up and down completely randomly.
Pair Corralation between Jinan Acetate and Formosa Optical
Assuming the 90 days trading horizon Jinan Acetate Chemical is expected to under-perform the Formosa Optical. In addition to that, Jinan Acetate is 1.39 times more volatile than Formosa Optical Technology. It trades about -0.31 of its total potential returns per unit of risk. Formosa Optical Technology is currently generating about 0.05 per unit of volatility. If you would invest 10,950 in Formosa Optical Technology on October 24, 2024 and sell it today you would earn a total of 100.00 from holding Formosa Optical Technology or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Jinan Acetate Chemical vs. Formosa Optical Technology
Performance |
| Timeline |
| Jinan Acetate Chemical |
| Formosa Optical Tech |
Jinan Acetate and Formosa Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jinan Acetate and Formosa Optical
The main advantage of trading using opposite Jinan Acetate and Formosa Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jinan Acetate position performs unexpectedly, Formosa Optical 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 Optical will offset losses from the drop in Formosa Optical's long position.| Jinan Acetate vs. San Fu Chemical | Jinan Acetate vs. Tex Year Industries | Jinan Acetate vs. Concraft Holding Co | Jinan Acetate vs. Coremax Corp |
| Formosa Optical vs. Grand Pacific Petrochemical | Formosa Optical vs. Taiwan Speciality Chemicals | Formosa Optical vs. SS Healthcare Holding | Formosa Optical vs. Phoenix Silicon International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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