Correlation Between Onyx Healthcare and Formosa Electronic
Can any of the company-specific risk be diversified away by investing in both Onyx Healthcare 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 Onyx Healthcare and Formosa Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Onyx Healthcare and Formosa Electronic Industries, you can compare the effects of market volatilities on Onyx Healthcare 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 Onyx Healthcare with a short position of Formosa Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Onyx Healthcare and Formosa Electronic.
Diversification Opportunities for Onyx Healthcare and Formosa Electronic
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Onyx and Formosa is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Onyx Healthcare and Formosa Electronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Electronic and Onyx Healthcare 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 Onyx Healthcare 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 Onyx Healthcare i.e., Onyx Healthcare and Formosa Electronic go up and down completely randomly.
Pair Corralation between Onyx Healthcare and Formosa Electronic
Assuming the 90 days trading horizon Onyx Healthcare is expected to under-perform the Formosa Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Onyx Healthcare is 2.3 times less risky than Formosa Electronic. The stock trades about -0.13 of its potential returns per unit of risk. The Formosa Electronic Industries is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,450 in Formosa Electronic Industries on August 30, 2024 and sell it today you would earn a total of 1,170 from holding Formosa Electronic Industries or generate 33.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Onyx Healthcare vs. Formosa Electronic Industries
Performance |
| Timeline |
| Onyx Healthcare |
| Formosa Electronic |
Onyx Healthcare and Formosa Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Onyx Healthcare and Formosa Electronic
The main advantage of trading using opposite Onyx Healthcare and Formosa Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Onyx Healthcare 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.| Onyx Healthcare vs. YuantaP shares Taiwan Mid Cap | Onyx Healthcare vs. Fubon MSCI Taiwan | Onyx Healthcare vs. YuantaP shares Taiwan Electronics | Onyx Healthcare vs. YuantaP shares Taiwan Top |
| 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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