Correlation Between Data International and Formosa Optical
Can any of the company-specific risk be diversified away by investing in both Data International 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 Data International and Formosa Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Data International Co and Formosa Optical Technology, you can compare the effects of market volatilities on Data International 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 Data International with a short position of Formosa Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data International and Formosa Optical.
Diversification Opportunities for Data International and Formosa Optical
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Data and Formosa is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Data International Co 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 Data International 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 Data International Co 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 Data International i.e., Data International and Formosa Optical go up and down completely randomly.
Pair Corralation between Data International and Formosa Optical
Assuming the 90 days trading horizon Data International Co is expected to generate 3.59 times more return on investment than Formosa Optical. However, Data International is 3.59 times more volatile than Formosa Optical Technology. It trades about 0.12 of its potential returns per unit of risk. Formosa Optical Technology is currently generating about 0.07 per unit of risk. If you would invest 3,710 in Data International Co on September 12, 2024 and sell it today you would earn a total of 11,840 from holding Data International Co or generate 319.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Data International Co vs. Formosa Optical Technology
Performance |
| Timeline |
| Data International |
| Formosa Optical Tech |
Data International and Formosa Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Data International and Formosa Optical
The main advantage of trading using opposite Data International and Formosa Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data International 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.| Data International vs. ANJI Technology Co | Data International vs. Emerging Display Technologies | Data International vs. U Tech Media Corp | Data International vs. Ruentex Development Co |
| Formosa Optical vs. Feng Tay Enterprises | Formosa Optical vs. Ruentex Development Co | Formosa Optical vs. WiseChip Semiconductor | Formosa Optical vs. Novatek Microelectronics Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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