Correlation Between Sigurd Microelectronics and Formosa Advanced
Can any of the company-specific risk be diversified away by investing in both Sigurd Microelectronics 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 Sigurd Microelectronics and Formosa Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sigurd Microelectronics Corp and Formosa Advanced Technologies, you can compare the effects of market volatilities on Sigurd Microelectronics 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 Sigurd Microelectronics with a short position of Formosa Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigurd Microelectronics and Formosa Advanced.
Diversification Opportunities for Sigurd Microelectronics and Formosa Advanced
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sigurd and Formosa is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sigurd Microelectronics Corp 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 Sigurd Microelectronics 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 Sigurd Microelectronics Corp 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 Sigurd Microelectronics i.e., Sigurd Microelectronics and Formosa Advanced go up and down completely randomly.
Pair Corralation between Sigurd Microelectronics and Formosa Advanced
Assuming the 90 days trading horizon Sigurd Microelectronics Corp is expected to generate 1.72 times more return on investment than Formosa Advanced. However, Sigurd Microelectronics is 1.72 times more volatile than Formosa Advanced Technologies. It trades about 0.06 of its potential returns per unit of risk. Formosa Advanced Technologies is currently generating about -0.05 per unit of risk. If you would invest 4,534 in Sigurd Microelectronics Corp on September 14, 2024 and sell it today you would earn a total of 2,436 from holding Sigurd Microelectronics Corp or generate 53.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Sigurd Microelectronics Corp vs. Formosa Advanced Technologies
Performance |
| Timeline |
| Sigurd Microelectronics |
| Formosa Advanced Tec |
Sigurd Microelectronics and Formosa Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sigurd Microelectronics and Formosa Advanced
The main advantage of trading using opposite Sigurd Microelectronics and Formosa Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigurd Microelectronics 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.| Sigurd Microelectronics vs. King Yuan Electronics | Sigurd Microelectronics vs. Powertech Technology | Sigurd Microelectronics vs. Greatek Electronics | Sigurd Microelectronics vs. Sitronix Technology Corp |
| Formosa Advanced vs. AU Optronics | Formosa Advanced vs. Innolux Corp | Formosa Advanced vs. Ruentex Development Co | Formosa Advanced vs. WiseChip Semiconductor |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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