Correlation Between Fitipower Integrated and Formosa Petrochemical
Can any of the company-specific risk be diversified away by investing in both Fitipower Integrated and Formosa Petrochemical 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 Fitipower Integrated and Formosa Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fitipower Integrated Technology and Formosa Petrochemical Corp, you can compare the effects of market volatilities on Fitipower Integrated and Formosa Petrochemical 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 Fitipower Integrated with a short position of Formosa Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fitipower Integrated and Formosa Petrochemical.
Diversification Opportunities for Fitipower Integrated and Formosa Petrochemical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fitipower and Formosa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fitipower Integrated Technolog and Formosa Petrochemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Petrochemical and Fitipower Integrated 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 Fitipower Integrated Technology are associated (or correlated) with Formosa Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Petrochemical has no effect on the direction of Fitipower Integrated i.e., Fitipower Integrated and Formosa Petrochemical go up and down completely randomly.
Pair Corralation between Fitipower Integrated and Formosa Petrochemical
Assuming the 90 days trading horizon Fitipower Integrated Technology is expected to generate 1.63 times more return on investment than Formosa Petrochemical. However, Fitipower Integrated is 1.63 times more volatile than Formosa Petrochemical Corp. It trades about -0.01 of its potential returns per unit of risk. Formosa Petrochemical Corp is currently generating about -0.18 per unit of risk. If you would invest 27,409 in Fitipower Integrated Technology on September 2, 2024 and sell it today you would lose (3,409) from holding Fitipower Integrated Technology or give up 12.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fitipower Integrated Technolog vs. Formosa Petrochemical Corp
Performance |
| Timeline |
| Fitipower Integrated |
| Formosa Petrochemical |
Fitipower Integrated and Formosa Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fitipower Integrated and Formosa Petrochemical
The main advantage of trading using opposite Fitipower Integrated and Formosa Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fitipower Integrated position performs unexpectedly, Formosa Petrochemical 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 Petrochemical will offset losses from the drop in Formosa Petrochemical's long position.| Fitipower Integrated vs. Taiwan Semiconductor Manufacturing | Fitipower Integrated vs. MediaTek | Fitipower Integrated vs. United Microelectronics | Fitipower Integrated vs. Novatek Microelectronics Corp |
| Formosa Petrochemical vs. WIN Semiconductors | Formosa Petrochemical vs. Winstek Semiconductor Co | Formosa Petrochemical vs. uPI Semiconductor Corp | Formosa Petrochemical vs. Niko Semiconductor 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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