Correlation Between Uni President and Formosa Chemicals
Can any of the company-specific risk be diversified away by investing in both Uni President and Formosa Chemicals 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 Uni President and Formosa Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uni President Enterprises Corp and Formosa Chemicals Fibre, you can compare the effects of market volatilities on Uni President and Formosa Chemicals 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 Uni President with a short position of Formosa Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uni President and Formosa Chemicals.
Diversification Opportunities for Uni President and Formosa Chemicals
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Uni and Formosa is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Uni President Enterprises Corp and Formosa Chemicals Fibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Chemicals Fibre and Uni President 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 Uni President Enterprises Corp are associated (or correlated) with Formosa Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Chemicals Fibre has no effect on the direction of Uni President i.e., Uni President and Formosa Chemicals go up and down completely randomly.
Pair Corralation between Uni President and Formosa Chemicals
Assuming the 90 days trading horizon Uni President Enterprises Corp is expected to generate 0.57 times more return on investment than Formosa Chemicals. However, Uni President Enterprises Corp is 1.75 times less risky than Formosa Chemicals. It trades about 0.05 of its potential returns per unit of risk. Formosa Chemicals Fibre is currently generating about -0.1 per unit of risk. If you would invest 8,360 in Uni President Enterprises Corp on September 6, 2024 and sell it today you would earn a total of 290.00 from holding Uni President Enterprises Corp or generate 3.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Uni President Enterprises Corp vs. Formosa Chemicals Fibre
Performance |
Timeline |
Uni President Enterp |
Formosa Chemicals Fibre |
Uni President and Formosa Chemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Uni President and Formosa Chemicals
The main advantage of trading using opposite Uni President and Formosa Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni President position performs unexpectedly, Formosa Chemicals 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 Chemicals will offset losses from the drop in Formosa Chemicals' long position.Uni President vs. President Chain Store | Uni President vs. Formosa Plastics Corp | Uni President vs. Nan Ya Plastics | Uni President vs. Taiwan Cement Corp |
Formosa Chemicals vs. Formosa Plastics Corp | Formosa Chemicals vs. Nan Ya Plastics | Formosa Chemicals vs. Formosa Petrochemical Corp | Formosa Chemicals vs. Cathay Financial Holding |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |