Correlation Between Simplo Technology and Formosa International
Can any of the company-specific risk be diversified away by investing in both Simplo Technology and Formosa International 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 Simplo Technology and Formosa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplo Technology Co and Formosa International Hotels, you can compare the effects of market volatilities on Simplo Technology and Formosa International 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 Simplo Technology with a short position of Formosa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplo Technology and Formosa International.
Diversification Opportunities for Simplo Technology and Formosa International
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simplo and Formosa is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Simplo Technology Co and Formosa International Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa International and Simplo Technology 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 Simplo Technology Co are associated (or correlated) with Formosa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa International has no effect on the direction of Simplo Technology i.e., Simplo Technology and Formosa International go up and down completely randomly.
Pair Corralation between Simplo Technology and Formosa International
Assuming the 90 days trading horizon Simplo Technology Co is expected to generate 1.15 times more return on investment than Formosa International. However, Simplo Technology is 1.15 times more volatile than Formosa International Hotels. It trades about 0.03 of its potential returns per unit of risk. Formosa International Hotels is currently generating about -0.07 per unit of risk. If you would invest 32,400 in Simplo Technology Co on September 2, 2024 and sell it today you would earn a total of 5,300 from holding Simplo Technology Co or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplo Technology Co vs. Formosa International Hotels
Performance |
| Timeline |
| Simplo Technology |
| Formosa International |
Simplo Technology and Formosa International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplo Technology and Formosa International
The main advantage of trading using opposite Simplo Technology and Formosa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplo Technology position performs unexpectedly, Formosa International 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 International will offset losses from the drop in Formosa International's long position.| Simplo Technology vs. Walsin Lihwa Corp | Simplo Technology vs. Voltronic Power Technology | Simplo Technology vs. Advanced Energy Solution | Simplo Technology vs. Ta Ya Electric |
| Formosa International vs. President Chain Store | Formosa International vs. Uni President Enterprises Corp | Formosa International vs. Ambassador Hotel | Formosa International vs. Hotai Motor 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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