Correlation Between Formosa International and PChome Online
Can any of the company-specific risk be diversified away by investing in both Formosa International and PChome Online 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 International and PChome Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa International Hotels and PChome Online, you can compare the effects of market volatilities on Formosa International and PChome Online 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 International with a short position of PChome Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa International and PChome Online.
Diversification Opportunities for Formosa International and PChome Online
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Formosa and PChome is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Formosa International Hotels and PChome Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PChome Online and Formosa International 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 International Hotels are associated (or correlated) with PChome Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PChome Online has no effect on the direction of Formosa International i.e., Formosa International and PChome Online go up and down completely randomly.
Pair Corralation between Formosa International and PChome Online
Assuming the 90 days trading horizon Formosa International Hotels is expected to under-perform the PChome Online. But the stock apears to be less risky and, when comparing its historical volatility, Formosa International Hotels is 1.38 times less risky than PChome Online. The stock trades about -0.02 of its potential returns per unit of risk. The PChome Online is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,154 in PChome Online on September 19, 2024 and sell it today you would lose (14.00) from holding PChome Online or give up 0.27% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Formosa International Hotels vs. PChome Online
Performance |
Timeline |
Formosa International |
PChome Online |
Formosa International and PChome Online Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Formosa International and PChome Online
The main advantage of trading using opposite Formosa International and PChome Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa International position performs unexpectedly, PChome Online 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 PChome Online will offset losses from the drop in PChome Online's long position.Formosa International vs. Feng Tay Enterprises | Formosa International vs. Ruentex Development Co | Formosa International vs. WiseChip Semiconductor | Formosa International vs. Novatek Microelectronics Corp |
PChome Online vs. momo Inc | PChome Online vs. President Chain Store | PChome Online vs. Uni President Enterprises Corp | PChome Online vs. Taiwan FamilyMart Co |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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