Correlation Between Flytech Technology and Formosa Electronic
Can any of the company-specific risk be diversified away by investing in both Flytech Technology and Formosa Electronic 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 Flytech Technology and Formosa Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flytech Technology Co and Formosa Electronic Industries, you can compare the effects of market volatilities on Flytech Technology and Formosa Electronic 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 Flytech Technology with a short position of Formosa Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flytech Technology and Formosa Electronic.
Diversification Opportunities for Flytech Technology and Formosa Electronic
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Flytech and Formosa is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Flytech Technology Co and Formosa Electronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Electronic and Flytech 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 Flytech Technology Co are associated (or correlated) with Formosa Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Electronic has no effect on the direction of Flytech Technology i.e., Flytech Technology and Formosa Electronic go up and down completely randomly.
Pair Corralation between Flytech Technology and Formosa Electronic
Assuming the 90 days trading horizon Flytech Technology Co is expected to generate 0.62 times more return on investment than Formosa Electronic. However, Flytech Technology Co is 1.62 times less risky than Formosa Electronic. It trades about 0.04 of its potential returns per unit of risk. Formosa Electronic Industries is currently generating about 0.01 per unit of risk. If you would invest 6,540 in Flytech Technology Co on August 30, 2024 and sell it today you would earn a total of 1,640 from holding Flytech Technology Co or generate 25.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flytech Technology Co vs. Formosa Electronic Industries
Performance |
| Timeline |
| Flytech Technology |
| Formosa Electronic |
Flytech Technology and Formosa Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flytech Technology and Formosa Electronic
The main advantage of trading using opposite Flytech Technology and Formosa Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flytech Technology position performs unexpectedly, Formosa Electronic 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 Electronic will offset losses from the drop in Formosa Electronic's long position.| Flytech Technology vs. Advantech Co | Flytech Technology vs. Posiflex Technology | Flytech Technology vs. IEI Integration Corp | Flytech Technology vs. Topco Scientific Co |
| Formosa Electronic vs. Info Tek | Formosa Electronic vs. Gallant Precision Machining | Formosa Electronic vs. Walton Advanced Engineering | Formosa Electronic vs. Cheng Mei Materials |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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