Correlation Between FNSTech and ChipsMedia
Can any of the company-specific risk be diversified away by investing in both FNSTech and ChipsMedia 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 FNSTech and ChipsMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and ChipsMedia, you can compare the effects of market volatilities on FNSTech and ChipsMedia 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 FNSTech with a short position of ChipsMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and ChipsMedia.
Diversification Opportunities for FNSTech and ChipsMedia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FNSTech and ChipsMedia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and ChipsMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipsMedia and FNSTech 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 FNSTech Co are associated (or correlated) with ChipsMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipsMedia has no effect on the direction of FNSTech i.e., FNSTech and ChipsMedia go up and down completely randomly.
Pair Corralation between FNSTech and ChipsMedia
Assuming the 90 days trading horizon FNSTech Co is expected to under-perform the ChipsMedia. But the stock apears to be less risky and, when comparing its historical volatility, FNSTech Co is 1.0 times less risky than ChipsMedia. The stock trades about -0.1 of its potential returns per unit of risk. The ChipsMedia is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,520,000 in ChipsMedia on September 2, 2024 and sell it today you would lose (163,000) from holding ChipsMedia or give up 10.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. ChipsMedia
Performance |
| Timeline |
| FNSTech |
| ChipsMedia |
FNSTech and ChipsMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and ChipsMedia
The main advantage of trading using opposite FNSTech and ChipsMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech position performs unexpectedly, ChipsMedia 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 ChipsMedia will offset losses from the drop in ChipsMedia's long position.| FNSTech vs. Samsung Electronics Co | FNSTech vs. Samsung Electronics Co | FNSTech vs. LG Energy Solution | FNSTech vs. SK Hynix |
| ChipsMedia vs. Duksan Hi Metal | ChipsMedia vs. Korea Investment Holdings | ChipsMedia vs. Kbi Metal Co | ChipsMedia vs. Daelim Trading 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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