Correlation Between Visual Photonics and Formosa Sumco
Can any of the company-specific risk be diversified away by investing in both Visual Photonics and Formosa Sumco 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 Visual Photonics and Formosa Sumco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visual Photonics Epitaxy and Formosa Sumco Technology, you can compare the effects of market volatilities on Visual Photonics and Formosa Sumco 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 Visual Photonics with a short position of Formosa Sumco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visual Photonics and Formosa Sumco.
Diversification Opportunities for Visual Photonics and Formosa Sumco
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visual and Formosa is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Visual Photonics Epitaxy and Formosa Sumco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa Sumco Technology and Visual Photonics 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 Visual Photonics Epitaxy are associated (or correlated) with Formosa Sumco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa Sumco Technology has no effect on the direction of Visual Photonics i.e., Visual Photonics and Formosa Sumco go up and down completely randomly.
Pair Corralation between Visual Photonics and Formosa Sumco
Assuming the 90 days trading horizon Visual Photonics Epitaxy is expected to under-perform the Formosa Sumco. In addition to that, Visual Photonics is 1.14 times more volatile than Formosa Sumco Technology. It trades about -0.1 of its total potential returns per unit of risk. Formosa Sumco Technology is currently generating about -0.04 per unit of volatility. If you would invest 10,000 in Formosa Sumco Technology on December 23, 2024 and sell it today you would lose (780.00) from holding Formosa Sumco Technology or give up 7.8% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Visual Photonics Epitaxy vs. Formosa Sumco Technology
Performance |
Timeline |
Visual Photonics Epitaxy |
Formosa Sumco Technology |
Visual Photonics and Formosa Sumco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Visual Photonics and Formosa Sumco
The main advantage of trading using opposite Visual Photonics and Formosa Sumco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visual Photonics position performs unexpectedly, Formosa Sumco 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 Sumco will offset losses from the drop in Formosa Sumco's long position.Visual Photonics vs. WIN Semiconductors | Visual Photonics vs. Advanced Wireless Semiconductor | Visual Photonics vs. Elan Microelectronics Corp | Visual Photonics vs. King Yuan Electronics |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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