Correlation Between Formosa Electronic and Phytohealth Corp
Can any of the company-specific risk be diversified away by investing in both Formosa Electronic and Phytohealth Corp 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 Electronic and Phytohealth Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Electronic Industries and Phytohealth Corp, you can compare the effects of market volatilities on Formosa Electronic and Phytohealth Corp 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 Electronic with a short position of Phytohealth Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Electronic and Phytohealth Corp.
Diversification Opportunities for Formosa Electronic and Phytohealth Corp
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Formosa and Phytohealth is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Electronic Industries and Phytohealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phytohealth Corp and Formosa Electronic 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 Electronic Industries are associated (or correlated) with Phytohealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phytohealth Corp has no effect on the direction of Formosa Electronic i.e., Formosa Electronic and Phytohealth Corp go up and down completely randomly.
Pair Corralation between Formosa Electronic and Phytohealth Corp
Assuming the 90 days trading horizon Formosa Electronic Industries is expected to under-perform the Phytohealth Corp. In addition to that, Formosa Electronic is 1.24 times more volatile than Phytohealth Corp. It trades about -0.03 of its total potential returns per unit of risk. Phytohealth Corp is currently generating about -0.01 per unit of volatility. If you would invest 1,930 in Phytohealth Corp on November 19, 2024 and sell it today you would lose (280.00) from holding Phytohealth Corp or give up 14.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa Electronic Industries vs. Phytohealth Corp
Performance |
| Timeline |
| Formosa Electronic |
| Phytohealth Corp |
Formosa Electronic and Phytohealth Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Electronic and Phytohealth Corp
The main advantage of trading using opposite Formosa Electronic and Phytohealth Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Electronic position performs unexpectedly, Phytohealth Corp 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 Phytohealth Corp will offset losses from the drop in Phytohealth Corp's long position.| Formosa Electronic vs. Info Tek | Formosa Electronic vs. Gallant Precision Machining | Formosa Electronic vs. Walton Advanced Engineering | Formosa Electronic vs. Cheng Mei Materials |
| Phytohealth Corp vs. CHC Healthcare Group | Phytohealth Corp vs. GenMont Biotech | Phytohealth Corp vs. Sinphar Pharmaceutical Co | Phytohealth Corp vs. Abnova Taiwan Corp |
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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