Correlation Between VIA Labs and Formosa Advanced
Can any of the company-specific risk be diversified away by investing in both VIA Labs 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 VIA Labs and Formosa Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIA Labs and Formosa Advanced Technologies, you can compare the effects of market volatilities on VIA Labs 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 VIA Labs with a short position of Formosa Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIA Labs and Formosa Advanced.
Diversification Opportunities for VIA Labs and Formosa Advanced
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VIA and Formosa is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding VIA Labs 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 VIA Labs 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 VIA Labs 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 VIA Labs i.e., VIA Labs and Formosa Advanced go up and down completely randomly.
Pair Corralation between VIA Labs and Formosa Advanced
Assuming the 90 days trading horizon VIA Labs is expected to generate 2.69 times more return on investment than Formosa Advanced. However, VIA Labs is 2.69 times more volatile than Formosa Advanced Technologies. It trades about -0.01 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 18,312 in VIA Labs on September 13, 2024 and sell it today you would lose (4,962) from holding VIA Labs or give up 27.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIA Labs vs. Formosa Advanced Technologies
Performance |
| Timeline |
| VIA Labs |
| Formosa Advanced Tec |
VIA Labs and Formosa Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIA Labs and Formosa Advanced
The main advantage of trading using opposite VIA Labs and Formosa Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIA Labs 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.| VIA Labs vs. Asmedia Technology | VIA Labs vs. Global Unichip Corp | VIA Labs vs. Alchip Technologies | VIA Labs vs. Kinsus Interconnect Technology |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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