Correlation Between FocalTech Systems and Global Unichip
Can any of the company-specific risk be diversified away by investing in both FocalTech Systems and Global Unichip 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 FocalTech Systems and Global Unichip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FocalTech Systems Co and Global Unichip Corp, you can compare the effects of market volatilities on FocalTech Systems and Global Unichip 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 FocalTech Systems with a short position of Global Unichip. Check out your portfolio center. Please also check ongoing floating volatility patterns of FocalTech Systems and Global Unichip.
Diversification Opportunities for FocalTech Systems and Global Unichip
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FocalTech and Global is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and Global Unichip Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Unichip Corp and FocalTech Systems 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 FocalTech Systems Co are associated (or correlated) with Global Unichip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Unichip Corp has no effect on the direction of FocalTech Systems i.e., FocalTech Systems and Global Unichip go up and down completely randomly.
Pair Corralation between FocalTech Systems and Global Unichip
Assuming the 90 days trading horizon FocalTech Systems Co is expected to under-perform the Global Unichip. But the stock apears to be less risky and, when comparing its historical volatility, FocalTech Systems Co is 1.58 times less risky than Global Unichip. The stock trades about -0.01 of its potential returns per unit of risk. The Global Unichip Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 147,000 in Global Unichip Corp on August 25, 2024 and sell it today you would lose (22,500) from holding Global Unichip Corp or give up 15.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FocalTech Systems Co vs. Global Unichip Corp
Performance |
| Timeline |
| FocalTech Systems |
| Global Unichip Corp |
FocalTech Systems and Global Unichip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FocalTech Systems and Global Unichip
The main advantage of trading using opposite FocalTech Systems and Global Unichip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FocalTech Systems position performs unexpectedly, Global Unichip 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 Global Unichip will offset losses from the drop in Global Unichip's long position.| FocalTech Systems vs. Novatek Microelectronics Corp | FocalTech Systems vs. Quanta Computer | FocalTech Systems vs. United Microelectronics |
| Global Unichip vs. Alchip Technologies | Global Unichip vs. Realtek Semiconductor Corp | Global Unichip vs. Faraday Technology Corp | Global Unichip vs. Novatek Microelectronics 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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