Correlation Between Faraday Technology and Realtek Semiconductor
Can any of the company-specific risk be diversified away by investing in both Faraday Technology and Realtek 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 Faraday Technology and Realtek Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Technology Corp and Realtek Semiconductor Corp, you can compare the effects of market volatilities on Faraday Technology and Realtek 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 Faraday Technology with a short position of Realtek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Technology and Realtek Semiconductor.
Diversification Opportunities for Faraday Technology and Realtek Semiconductor
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Faraday and Realtek is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Technology Corp and Realtek Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realtek Semiconductor and Faraday Technology 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 Faraday Technology Corp are associated (or correlated) with Realtek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realtek Semiconductor has no effect on the direction of Faraday Technology i.e., Faraday Technology and Realtek Semiconductor go up and down completely randomly.
Pair Corralation between Faraday Technology and Realtek Semiconductor
Assuming the 90 days trading horizon Faraday Technology is expected to generate 1.11 times less return on investment than Realtek Semiconductor. In addition to that, Faraday Technology is 1.62 times more volatile than Realtek Semiconductor Corp. It trades about 0.04 of its total potential returns per unit of risk. Realtek Semiconductor Corp is currently generating about 0.07 per unit of volatility. If you would invest 28,900 in Realtek Semiconductor Corp on September 13, 2024 and sell it today you would earn a total of 23,800 from holding Realtek Semiconductor Corp or generate 82.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Technology Corp vs. Realtek Semiconductor Corp
Performance |
| Timeline |
| Faraday Technology Corp |
| Realtek Semiconductor |
Faraday Technology and Realtek Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Technology and Realtek Semiconductor
The main advantage of trading using opposite Faraday Technology and Realtek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Technology position performs unexpectedly, Realtek 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 Realtek Semiconductor will offset losses from the drop in Realtek Semiconductor's long position.| Faraday Technology vs. Global Unichip Corp | Faraday Technology vs. Novatek Microelectronics Corp | Faraday Technology vs. Realtek Semiconductor Corp | Faraday Technology vs. Unimicron Technology Corp |
| Realtek Semiconductor vs. Novatek Microelectronics Corp | Realtek Semiconductor vs. MediaTek | Realtek Semiconductor vs. VIA Technologies | Realtek Semiconductor vs. Quanta Computer |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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