Correlation Between Formosa Optical and Quanta Storage
Can any of the company-specific risk be diversified away by investing in both Formosa Optical and Quanta Storage 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 Optical and Quanta Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Optical Technology and Quanta Storage, you can compare the effects of market volatilities on Formosa Optical and Quanta Storage 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 Optical with a short position of Quanta Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Optical and Quanta Storage.
Diversification Opportunities for Formosa Optical and Quanta Storage
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Formosa and Quanta is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Optical Technology and Quanta Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Storage and Formosa Optical 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 Optical Technology are associated (or correlated) with Quanta Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Storage has no effect on the direction of Formosa Optical i.e., Formosa Optical and Quanta Storage go up and down completely randomly.
Pair Corralation between Formosa Optical and Quanta Storage
Assuming the 90 days trading horizon Formosa Optical Technology is expected to generate 0.47 times more return on investment than Quanta Storage. However, Formosa Optical Technology is 2.12 times less risky than Quanta Storage. It trades about 0.15 of its potential returns per unit of risk. Quanta Storage is currently generating about 0.05 per unit of risk. If you would invest 10,750 in Formosa Optical Technology on September 14, 2024 and sell it today you would earn a total of 350.00 from holding Formosa Optical Technology or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa Optical Technology vs. Quanta Storage
Performance |
| Timeline |
| Formosa Optical Tech |
| Quanta Storage |
Formosa Optical and Quanta Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Optical and Quanta Storage
The main advantage of trading using opposite Formosa Optical and Quanta Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Optical position performs unexpectedly, Quanta Storage 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 Quanta Storage will offset losses from the drop in Quanta Storage's long position.| Formosa Optical vs. Forest Water Environmental | Formosa Optical vs. Oceanic Beverages Co | Formosa Optical vs. Song Ho Industrial | Formosa Optical vs. Taiwan Steel Union |
| Quanta Storage vs. Qisda Corp | Quanta Storage vs. Quanta Computer | Quanta Storage vs. Wistron Corp | Quanta Storage vs. Delta Electronics |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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