Correlation Between Faraday Technology and Elite Semiconductor
Can any of the company-specific risk be diversified away by investing in both Faraday Technology and Elite 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 Elite 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 Elite Semiconductor Memory, you can compare the effects of market volatilities on Faraday Technology and Elite 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 Elite Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Technology and Elite Semiconductor.
Diversification Opportunities for Faraday Technology and Elite Semiconductor
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Faraday and Elite is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Technology Corp and Elite Semiconductor Memory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite 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 Elite Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Semiconductor has no effect on the direction of Faraday Technology i.e., Faraday Technology and Elite Semiconductor go up and down completely randomly.
Pair Corralation between Faraday Technology and Elite Semiconductor
Assuming the 90 days trading horizon Faraday Technology Corp is expected to generate 1.33 times more return on investment than Elite Semiconductor. However, Faraday Technology is 1.33 times more volatile than Elite Semiconductor Memory. It trades about -0.04 of its potential returns per unit of risk. Elite Semiconductor Memory is currently generating about -0.11 per unit of risk. If you would invest 23,200 in Faraday Technology Corp on October 25, 2024 and sell it today you would lose (700.00) from holding Faraday Technology Corp or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Technology Corp vs. Elite Semiconductor Memory
Performance |
| Timeline |
| Faraday Technology Corp |
| Elite Semiconductor |
Faraday Technology and Elite Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Technology and Elite Semiconductor
The main advantage of trading using opposite Faraday Technology and Elite Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Technology position performs unexpectedly, Elite 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 Elite Semiconductor will offset losses from the drop in Elite 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 |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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