Correlation Between Faraday Technology and Etron Technology
Can any of the company-specific risk be diversified away by investing in both Faraday Technology and Etron Technology 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 Etron Technology 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 Etron Technology, you can compare the effects of market volatilities on Faraday Technology and Etron Technology 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 Etron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Technology and Etron Technology.
Diversification Opportunities for Faraday Technology and Etron Technology
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and Etron is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Technology Corp and Etron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etron Technology 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 Etron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etron Technology has no effect on the direction of Faraday Technology i.e., Faraday Technology and Etron Technology go up and down completely randomly.
Pair Corralation between Faraday Technology and Etron Technology
Assuming the 90 days trading horizon Faraday Technology Corp is expected to generate 1.31 times more return on investment than Etron Technology. However, Faraday Technology is 1.31 times more volatile than Etron Technology. It trades about 0.04 of its potential returns per unit of risk. Etron Technology is currently generating about 0.0 per unit of risk. If you would invest 15,900 in Faraday Technology Corp on September 13, 2024 and sell it today you would earn a total of 7,200 from holding Faraday Technology Corp or generate 45.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Technology Corp vs. Etron Technology
Performance |
| Timeline |
| Faraday Technology Corp |
| Etron Technology |
Faraday Technology and Etron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Technology and Etron Technology
The main advantage of trading using opposite Faraday Technology and Etron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Technology position performs unexpectedly, Etron Technology 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 Etron Technology will offset losses from the drop in Etron Technology'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 |
| Etron Technology vs. Sunplus Technology Co | Etron Technology vs. Realtek Semiconductor Corp | Etron Technology vs. Winbond Electronics Corp | Etron Technology vs. VIA Technologies |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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