Correlation Between Formosa Petrochemical and Symtek Automation
Can any of the company-specific risk be diversified away by investing in both Formosa Petrochemical and Symtek Automation 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 Formosa Petrochemical and Symtek Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Petrochemical Corp and Symtek Automation Asia, you can compare the effects of market volatilities on Formosa Petrochemical and Symtek Automation 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 Formosa Petrochemical with a short position of Symtek Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Petrochemical and Symtek Automation.
Diversification Opportunities for Formosa Petrochemical and Symtek Automation
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Formosa and Symtek is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Petrochemical Corp and Symtek Automation Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symtek Automation Asia and Formosa Petrochemical 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 Formosa Petrochemical Corp are associated (or correlated) with Symtek Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symtek Automation Asia has no effect on the direction of Formosa Petrochemical i.e., Formosa Petrochemical and Symtek Automation go up and down completely randomly.
Pair Corralation between Formosa Petrochemical and Symtek Automation
Assuming the 90 days trading horizon Formosa Petrochemical Corp is expected to under-perform the Symtek Automation. But the stock apears to be less risky and, when comparing its historical volatility, Formosa Petrochemical Corp is 1.91 times less risky than Symtek Automation. The stock trades about -0.19 of its potential returns per unit of risk. The Symtek Automation Asia is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 11,442 in Symtek Automation Asia on August 28, 2024 and sell it today you would earn a total of 11,958 from holding Symtek Automation Asia or generate 104.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa Petrochemical Corp vs. Symtek Automation Asia
Performance |
| Timeline |
| Formosa Petrochemical |
| Symtek Automation Asia |
Formosa Petrochemical and Symtek Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Petrochemical and Symtek Automation
The main advantage of trading using opposite Formosa Petrochemical and Symtek Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Petrochemical position performs unexpectedly, Symtek Automation 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 Symtek Automation will offset losses from the drop in Symtek Automation's long position.| Formosa Petrochemical vs. U Media Communications | Formosa Petrochemical vs. WinMate Communication INC | Formosa Petrochemical vs. GAME HOURS | Formosa Petrochemical vs. International Games System |
| Symtek Automation vs. Golden Friends | Symtek Automation vs. Sunonwealth Electric Machine | Symtek Automation vs. Rechi Precision Co | Symtek Automation vs. C Sun Manufacturing |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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