Correlation Between Sunfun Info and Formosan Rubber
Can any of the company-specific risk be diversified away by investing in both Sunfun Info and Formosan Rubber 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 Sunfun Info and Formosan Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunfun Info Co and Formosan Rubber Group, you can compare the effects of market volatilities on Sunfun Info and Formosan Rubber 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 Sunfun Info with a short position of Formosan Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfun Info and Formosan Rubber.
Diversification Opportunities for Sunfun Info and Formosan Rubber
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sunfun and Formosan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sunfun Info Co and Formosan Rubber Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formosan Rubber Group and Sunfun Info 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 Sunfun Info Co are associated (or correlated) with Formosan Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formosan Rubber Group has no effect on the direction of Sunfun Info i.e., Sunfun Info and Formosan Rubber go up and down completely randomly.
Pair Corralation between Sunfun Info and Formosan Rubber
Assuming the 90 days trading horizon Sunfun Info Co is expected to generate 118.86 times more return on investment than Formosan Rubber. However, Sunfun Info is 118.86 times more volatile than Formosan Rubber Group. It trades about 0.14 of its potential returns per unit of risk. Formosan Rubber Group is currently generating about 0.01 per unit of risk. If you would invest 1,811 in Sunfun Info Co on October 7, 2024 and sell it today you would earn a total of 1,559 from holding Sunfun Info Co or generate 86.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Sunfun Info Co vs. Formosan Rubber Group
Performance |
Timeline |
Sunfun Info |
Formosan Rubber Group |
Sunfun Info and Formosan Rubber Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sunfun Info and Formosan Rubber
The main advantage of trading using opposite Sunfun Info and Formosan Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfun Info position performs unexpectedly, Formosan Rubber 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 Formosan Rubber will offset losses from the drop in Formosan Rubber's long position.Sunfun Info vs. Lihtai Construction Enterprise | Sunfun Info vs. Dawushan Farm Tech | Sunfun Info vs. Far EasTone Telecommunications | Sunfun Info vs. Tai Tung Communication |
Formosan Rubber vs. Nankang Rubber Tire | Formosan Rubber vs. Federal Corp | Formosan Rubber vs. Kenda Rubber Industrial | Formosan Rubber vs. Yulon Motor 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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