Correlation Between ASRock and FocalTech Systems
Can any of the company-specific risk be diversified away by investing in both ASRock and FocalTech Systems 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 ASRock and FocalTech Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASRock Inc and FocalTech Systems Co, you can compare the effects of market volatilities on ASRock and FocalTech Systems 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 ASRock with a short position of FocalTech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASRock and FocalTech Systems.
Diversification Opportunities for ASRock and FocalTech Systems
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ASRock and FocalTech is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ASRock Inc and FocalTech Systems Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FocalTech Systems and ASRock 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 ASRock Inc are associated (or correlated) with FocalTech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FocalTech Systems has no effect on the direction of ASRock i.e., ASRock and FocalTech Systems go up and down completely randomly.
Pair Corralation between ASRock and FocalTech Systems
Assuming the 90 days trading horizon ASRock Inc is expected to generate 1.96 times more return on investment than FocalTech Systems. However, ASRock is 1.96 times more volatile than FocalTech Systems Co. It trades about 0.21 of its potential returns per unit of risk. FocalTech Systems Co is currently generating about 0.12 per unit of risk. If you would invest 20,900 in ASRock Inc on August 27, 2024 and sell it today you would earn a total of 3,050 from holding ASRock Inc or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASRock Inc vs. FocalTech Systems Co
Performance |
| Timeline |
| ASRock Inc |
| FocalTech Systems |
ASRock and FocalTech Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASRock and FocalTech Systems
The main advantage of trading using opposite ASRock and FocalTech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASRock position performs unexpectedly, FocalTech Systems 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 FocalTech Systems will offset losses from the drop in FocalTech Systems' long position.| ASRock vs. Novatek Microelectronics Corp | ASRock vs. Quanta Computer | ASRock vs. United Microelectronics |
| FocalTech Systems vs. Novatek Microelectronics Corp | FocalTech Systems vs. Sitronix Technology Corp | FocalTech Systems vs. Elan Microelectronics Corp | FocalTech Systems vs. Global Unichip 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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