Correlation Between PCL Technologies and Formosan Union
Can any of the company-specific risk be diversified away by investing in both PCL Technologies 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 PCL Technologies and Formosan Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCL Technologies and Formosan Union Chemical, you can compare the effects of market volatilities on PCL Technologies 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 PCL Technologies with a short position of Formosan Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCL Technologies and Formosan Union.
Diversification Opportunities for PCL Technologies and Formosan Union
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PCL and Formosan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PCL Technologies 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 PCL Technologies 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 PCL Technologies 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 PCL Technologies i.e., PCL Technologies and Formosan Union go up and down completely randomly.
Pair Corralation between PCL Technologies and Formosan Union
Assuming the 90 days trading horizon PCL Technologies is expected to under-perform the Formosan Union. In addition to that, PCL Technologies is 2.06 times more volatile than Formosan Union Chemical. It trades about -0.48 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PCL Technologies vs. Formosan Union Chemical
Performance |
| Timeline |
| PCL Technologies |
| Formosan Union Chemical |
PCL Technologies and Formosan Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCL Technologies and Formosan Union
The main advantage of trading using opposite PCL Technologies and Formosan Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCL Technologies 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.| PCL Technologies vs. Ma Kuang Healthcare | PCL Technologies vs. Evermore Chemical Industry | PCL Technologies vs. Pacific Hospital Supply | PCL Technologies vs. Tainet Communication System |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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