Correlation Between Faraday Technology and Top Union
Can any of the company-specific risk be diversified away by investing in both Faraday Technology and Top Union 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 Top Union 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 Top Union Electronics, you can compare the effects of market volatilities on Faraday Technology and Top Union 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 Top Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Technology and Top Union.
Diversification Opportunities for Faraday Technology and Top Union
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faraday and Top is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Technology Corp and Top Union Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top Union Electronics 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 Top Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top Union Electronics has no effect on the direction of Faraday Technology i.e., Faraday Technology and Top Union go up and down completely randomly.
Pair Corralation between Faraday Technology and Top Union
Assuming the 90 days trading horizon Faraday Technology Corp is expected to under-perform the Top Union. In addition to that, Faraday Technology is 2.02 times more volatile than Top Union Electronics. It trades about -0.06 of its total potential returns per unit of risk. Top Union Electronics is currently generating about -0.03 per unit of volatility. If you would invest 3,595 in Top Union Electronics on September 1, 2024 and sell it today you would lose (265.00) from holding Top Union Electronics or give up 7.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Technology Corp vs. Top Union Electronics
Performance |
| Timeline |
| Faraday Technology Corp |
| Top Union Electronics |
Faraday Technology and Top Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Technology and Top Union
The main advantage of trading using opposite Faraday Technology and Top Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Technology position performs unexpectedly, Top Union 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 Top Union will offset losses from the drop in Top Union'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 |
| Top Union vs. Sino American Silicon Products | Top Union vs. Powertech Technology | Top Union vs. Formosa Sumco Technology | Top Union vs. Radiant Opto Electronics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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