Correlation Between Hsin Ba and Formosa Optical
Can any of the company-specific risk be diversified away by investing in both Hsin Ba and Formosa Optical 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 Hsin Ba and Formosa Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsin Ba Ba and Formosa Optical Technology, you can compare the effects of market volatilities on Hsin Ba and Formosa Optical 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 Hsin Ba with a short position of Formosa Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Ba and Formosa Optical.
Diversification Opportunities for Hsin Ba and Formosa Optical
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hsin and Formosa is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Ba Ba and Formosa Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Optical Tech and Hsin Ba 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 Hsin Ba Ba are associated (or correlated) with Formosa Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Optical Tech has no effect on the direction of Hsin Ba i.e., Hsin Ba and Formosa Optical go up and down completely randomly.
Pair Corralation between Hsin Ba and Formosa Optical
Assuming the 90 days trading horizon Hsin Ba Ba is expected to generate 3.95 times more return on investment than Formosa Optical. However, Hsin Ba is 3.95 times more volatile than Formosa Optical Technology. It trades about 0.08 of its potential returns per unit of risk. Formosa Optical Technology is currently generating about 0.08 per unit of risk. If you would invest 9,260 in Hsin Ba Ba on September 3, 2024 and sell it today you would earn a total of 3,340 from holding Hsin Ba Ba or generate 36.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsin Ba Ba vs. Formosa Optical Technology
Performance |
| Timeline |
| Hsin Ba Ba |
| Formosa Optical Tech |
Hsin Ba and Formosa Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Ba and Formosa Optical
The main advantage of trading using opposite Hsin Ba and Formosa Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Ba position performs unexpectedly, Formosa Optical 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 Optical will offset losses from the drop in Formosa Optical's long position.| Hsin Ba vs. Universal Microelectronics Co | Hsin Ba vs. AVerMedia Technologies | Hsin Ba vs. Symtek Automation Asia | Hsin Ba vs. WiseChip Semiconductor |
| Formosa Optical vs. Tainan Spinning Co | Formosa Optical vs. Chia Her Industrial | Formosa Optical vs. WiseChip Semiconductor | Formosa Optical vs. Novatek Microelectronics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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