Correlation Between Formosa Advanced and Auden Techno
Can any of the company-specific risk be diversified away by investing in both Formosa Advanced and Auden Techno 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 Advanced and Auden Techno into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Advanced Technologies and Auden Techno, you can compare the effects of market volatilities on Formosa Advanced and Auden Techno 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 Advanced with a short position of Auden Techno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Advanced and Auden Techno.
Diversification Opportunities for Formosa Advanced and Auden Techno
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Formosa and Auden is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Advanced Technologies and Auden Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auden Techno and Formosa Advanced 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 Advanced Technologies are associated (or correlated) with Auden Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auden Techno has no effect on the direction of Formosa Advanced i.e., Formosa Advanced and Auden Techno go up and down completely randomly.
Pair Corralation between Formosa Advanced and Auden Techno
Assuming the 90 days trading horizon Formosa Advanced Technologies is expected to under-perform the Auden Techno. But the stock apears to be less risky and, when comparing its historical volatility, Formosa Advanced Technologies is 1.8 times less risky than Auden Techno. The stock trades about -0.1 of its potential returns per unit of risk. The Auden Techno is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 11,850 in Auden Techno on December 4, 2024 and sell it today you would lose (900.00) from holding Auden Techno or give up 7.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.15% |
| Values | Daily Returns |
Formosa Advanced Technologies vs. Auden Techno
Performance |
| Timeline |
| Formosa Advanced Tec |
| Auden Techno |
Formosa Advanced and Auden Techno Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Advanced and Auden Techno
The main advantage of trading using opposite Formosa Advanced and Auden Techno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Advanced position performs unexpectedly, Auden Techno 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 Auden Techno will offset losses from the drop in Auden Techno's long position.| Formosa Advanced vs. Powertech Technology | Formosa Advanced vs. Greatek Electronics | Formosa Advanced vs. Sigurd Microelectronics Corp | Formosa Advanced vs. King Yuan Electronics |
| Auden Techno vs. CyberTAN Technology | Auden Techno vs. Merry Electronics Co | Auden Techno vs. Unizyx Holding Corp | Auden Techno vs. Microelectronics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |