Correlation Between AP Memory and Formosa Petrochemical
Can any of the company-specific risk be diversified away by investing in both AP Memory and Formosa Petrochemical 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 AP Memory and Formosa Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Memory Technology and Formosa Petrochemical Corp, you can compare the effects of market volatilities on AP Memory and Formosa Petrochemical 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 AP Memory with a short position of Formosa Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Memory and Formosa Petrochemical.
Diversification Opportunities for AP Memory and Formosa Petrochemical
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between 6531 and Formosa is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding AP Memory Technology and Formosa Petrochemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Petrochemical and AP Memory 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 AP Memory Technology are associated (or correlated) with Formosa Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Petrochemical has no effect on the direction of AP Memory i.e., AP Memory and Formosa Petrochemical go up and down completely randomly.
Pair Corralation between AP Memory and Formosa Petrochemical
Assuming the 90 days trading horizon AP Memory Technology is expected to generate 1.08 times more return on investment than Formosa Petrochemical. However, AP Memory is 1.08 times more volatile than Formosa Petrochemical Corp. It trades about -0.03 of its potential returns per unit of risk. Formosa Petrochemical Corp is currently generating about -0.3 per unit of risk. If you would invest 30,350 in AP Memory Technology on August 31, 2024 and sell it today you would lose (850.00) from holding AP Memory Technology or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
AP Memory Technology vs. Formosa Petrochemical Corp
Performance |
| Timeline |
| AP Memory Technology |
| Formosa Petrochemical |
AP Memory and Formosa Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Memory and Formosa Petrochemical
The main advantage of trading using opposite AP Memory and Formosa Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Memory position performs unexpectedly, Formosa Petrochemical 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 Petrochemical will offset losses from the drop in Formosa Petrochemical's long position.| AP Memory vs. Global Unichip Corp | AP Memory vs. Alchip Technologies | AP Memory vs. FocalTech Systems Co | AP Memory vs. Asmedia Technology |
| Formosa Petrochemical vs. Taiwan Taomee Co | Formosa Petrochemical vs. AP Memory Technology | Formosa Petrochemical vs. RichWave Technology Corp | Formosa Petrochemical vs. Fitipower Integrated Technology |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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