Correlation Between FNSTech and ABOV Semiconductor
Can any of the company-specific risk be diversified away by investing in both FNSTech and ABOV Semiconductor 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 ABOV Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and ABOV Semiconductor Co, you can compare the effects of market volatilities on FNSTech and ABOV Semiconductor 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 ABOV Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and ABOV Semiconductor.
Diversification Opportunities for FNSTech and ABOV Semiconductor
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FNSTech and ABOV is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and ABOV Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABOV Semiconductor 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 ABOV Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABOV Semiconductor has no effect on the direction of FNSTech i.e., FNSTech and ABOV Semiconductor go up and down completely randomly.
Pair Corralation between FNSTech and ABOV Semiconductor
Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.27 times more return on investment than ABOV Semiconductor. However, FNSTech is 1.27 times more volatile than ABOV Semiconductor Co. It trades about 0.4 of its potential returns per unit of risk. ABOV Semiconductor Co is currently generating about 0.27 per unit of risk. If you would invest 802,000 in FNSTech Co on October 30, 2024 and sell it today you would earn a total of 286,000 from holding FNSTech Co or generate 35.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. ABOV Semiconductor Co
Performance |
| Timeline |
| FNSTech |
| ABOV Semiconductor |
FNSTech and ABOV Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and ABOV Semiconductor
The main advantage of trading using opposite FNSTech and ABOV Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech position performs unexpectedly, ABOV Semiconductor 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 ABOV Semiconductor will offset losses from the drop in ABOV Semiconductor's long position.| FNSTech vs. Samsung Electronics Co | FNSTech vs. Samsung Electronics Co | FNSTech vs. LG Energy Solution | FNSTech vs. SK Hynix |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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