Correlation Between Faraday Technology and Topco Scientific
Can any of the company-specific risk be diversified away by investing in both Faraday Technology and Topco Scientific 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 Topco Scientific 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 Topco Scientific Co, you can compare the effects of market volatilities on Faraday Technology and Topco Scientific 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 Topco Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Technology and Topco Scientific.
Diversification Opportunities for Faraday Technology and Topco Scientific
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faraday and Topco is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Technology Corp and Topco Scientific Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topco Scientific 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 Topco Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topco Scientific has no effect on the direction of Faraday Technology i.e., Faraday Technology and Topco Scientific go up and down completely randomly.
Pair Corralation between Faraday Technology and Topco Scientific
Assuming the 90 days trading horizon Faraday Technology is expected to generate 1.22 times less return on investment than Topco Scientific. In addition to that, Faraday Technology is 2.16 times more volatile than Topco Scientific Co. It trades about 0.03 of its total potential returns per unit of risk. Topco Scientific Co is currently generating about 0.09 per unit of volatility. If you would invest 16,850 in Topco Scientific Co on August 30, 2024 and sell it today you would earn a total of 12,850 from holding Topco Scientific Co or generate 76.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Technology Corp vs. Topco Scientific Co
Performance |
| Timeline |
| Faraday Technology Corp |
| Topco Scientific |
Faraday Technology and Topco Scientific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Technology and Topco Scientific
The main advantage of trading using opposite Faraday Technology and Topco Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Technology position performs unexpectedly, Topco Scientific 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 Topco Scientific will offset losses from the drop in Topco Scientific'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 |
| Topco Scientific vs. International CSRC Investment | Topco Scientific vs. TWOWAY Communications | Topco Scientific vs. Insyde Software | Topco Scientific vs. Shanghai Commercial Savings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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