Correlation Between HOYA Resort and Formosa International
Can any of the company-specific risk be diversified away by investing in both HOYA Resort and Formosa International 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 HOYA Resort and Formosa International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOYA Resort Hotel and Formosa International Hotels, you can compare the effects of market volatilities on HOYA Resort and Formosa International 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 HOYA Resort with a short position of Formosa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOYA Resort and Formosa International.
Diversification Opportunities for HOYA Resort and Formosa International
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HOYA and Formosa is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding HOYA Resort Hotel and Formosa International Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosa International and HOYA Resort 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 HOYA Resort Hotel are associated (or correlated) with Formosa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosa International has no effect on the direction of HOYA Resort i.e., HOYA Resort and Formosa International go up and down completely randomly.
Pair Corralation between HOYA Resort and Formosa International
Assuming the 90 days trading horizon HOYA Resort Hotel is expected to generate 2.95 times more return on investment than Formosa International. However, HOYA Resort is 2.95 times more volatile than Formosa International Hotels. It trades about 0.08 of its potential returns per unit of risk. Formosa International Hotels is currently generating about 0.03 per unit of risk. If you would invest 1,900 in HOYA Resort Hotel on December 4, 2024 and sell it today you would earn a total of 250.00 from holding HOYA Resort Hotel or generate 13.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
HOYA Resort Hotel vs. Formosa International Hotels
Performance |
Timeline |
HOYA Resort Hotel |
Formosa International |
HOYA Resort and Formosa International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HOYA Resort and Formosa International
The main advantage of trading using opposite HOYA Resort and Formosa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOYA Resort position performs unexpectedly, Formosa International 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 International will offset losses from the drop in Formosa International's long position.HOYA Resort vs. Arima Communications Corp | HOYA Resort vs. Cowealth Medical Holding | HOYA Resort vs. Union Insurance Co | HOYA Resort vs. BenQ Medical Technology |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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