Correlation Between Powertech Technology and Formosa Advanced
Can any of the company-specific risk be diversified away by investing in both Powertech Technology and Formosa Advanced 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 Powertech Technology and Formosa Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Technology and Formosa Advanced Technologies, you can compare the effects of market volatilities on Powertech Technology and Formosa Advanced 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 Powertech Technology with a short position of Formosa Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Technology and Formosa Advanced.
Diversification Opportunities for Powertech Technology and Formosa Advanced
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Powertech and Formosa is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Technology and Formosa Advanced Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Advanced Tec and Powertech 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 Powertech Technology are associated (or correlated) with Formosa Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Advanced Tec has no effect on the direction of Powertech Technology i.e., Powertech Technology and Formosa Advanced go up and down completely randomly.
Pair Corralation between Powertech Technology and Formosa Advanced
Assuming the 90 days trading horizon Powertech Technology is expected to under-perform the Formosa Advanced. In addition to that, Powertech Technology is 2.03 times more volatile than Formosa Advanced Technologies. It trades about -0.04 of its total potential returns per unit of risk. Formosa Advanced Technologies is currently generating about -0.06 per unit of volatility. If you would invest 3,615 in Formosa Advanced Technologies on December 4, 2024 and sell it today you would lose (605.00) from holding Formosa Advanced Technologies or give up 16.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Powertech Technology vs. Formosa Advanced Technologies
Performance |
| Timeline |
| Powertech Technology |
| Formosa Advanced Tec |
Powertech Technology and Formosa Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Technology and Formosa Advanced
The main advantage of trading using opposite Powertech Technology and Formosa Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Technology position performs unexpectedly, Formosa Advanced 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 Advanced will offset losses from the drop in Formosa Advanced's long position.| Powertech Technology vs. Novatek Microelectronics Corp | Powertech Technology vs. King Yuan Electronics | Powertech Technology vs. Realtek Semiconductor Corp | Powertech Technology vs. Nanya Technology Corp |
| Formosa Advanced vs. Powertech Technology | Formosa Advanced vs. Greatek Electronics | Formosa Advanced vs. Sigurd Microelectronics Corp | Formosa Advanced vs. King Yuan 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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