Correlation Between Micro Star and FocalTech Systems
Can any of the company-specific risk be diversified away by investing in both Micro Star and FocalTech Systems 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 Micro Star and FocalTech Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micro Star International Co and FocalTech Systems Co, you can compare the effects of market volatilities on Micro Star and FocalTech Systems 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 Micro Star with a short position of FocalTech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Star and FocalTech Systems.
Diversification Opportunities for Micro Star and FocalTech Systems
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Micro and FocalTech is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Micro Star International Co and FocalTech Systems Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FocalTech Systems and Micro Star 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 Micro Star International Co are associated (or correlated) with FocalTech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FocalTech Systems has no effect on the direction of Micro Star i.e., Micro Star and FocalTech Systems go up and down completely randomly.
Pair Corralation between Micro Star and FocalTech Systems
Assuming the 90 days trading horizon Micro Star International Co is expected to under-perform the FocalTech Systems. But the stock apears to be less risky and, when comparing its historical volatility, Micro Star International Co is 1.1 times less risky than FocalTech Systems. The stock trades about -0.14 of its potential returns per unit of risk. The FocalTech Systems Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,440 in FocalTech Systems Co on August 31, 2024 and sell it today you would earn a total of 190.00 from holding FocalTech Systems Co or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micro Star International Co vs. FocalTech Systems Co
Performance |
| Timeline |
| Micro Star Internati |
| FocalTech Systems |
Micro Star and FocalTech Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micro Star and FocalTech Systems
The main advantage of trading using opposite Micro Star and FocalTech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micro Star position performs unexpectedly, FocalTech Systems 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 FocalTech Systems will offset losses from the drop in FocalTech Systems' long position.| Micro Star vs. United Microelectronics | Micro Star vs. Winbond Electronics Corp | Micro Star vs. Macronix International Co |
| FocalTech Systems vs. United Microelectronics | FocalTech Systems vs. Winbond Electronics Corp | FocalTech Systems vs. Macronix International 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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