Correlation Between FocalTech Systems and Cheng Mei
Can any of the company-specific risk be diversified away by investing in both FocalTech Systems and Cheng Mei 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 Cheng Mei 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 Cheng Mei Materials, you can compare the effects of market volatilities on FocalTech Systems and Cheng Mei 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 Cheng Mei. Check out your portfolio center. Please also check ongoing floating volatility patterns of FocalTech Systems and Cheng Mei.
Diversification Opportunities for FocalTech Systems and Cheng Mei
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FocalTech and Cheng is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and Cheng Mei Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Mei Materials 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 Cheng Mei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Mei Materials has no effect on the direction of FocalTech Systems i.e., FocalTech Systems and Cheng Mei go up and down completely randomly.
Pair Corralation between FocalTech Systems and Cheng Mei
Assuming the 90 days trading horizon FocalTech Systems Co is expected to generate 1.16 times more return on investment than Cheng Mei. However, FocalTech Systems is 1.16 times more volatile than Cheng Mei Materials. It trades about 0.1 of its potential returns per unit of risk. Cheng Mei Materials is currently generating about 0.03 per unit of risk. If you would invest 8,440 in FocalTech Systems Co on September 1, 2024 and sell it today you would earn a total of 350.00 from holding FocalTech Systems Co or generate 4.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FocalTech Systems Co vs. Cheng Mei Materials
Performance |
| Timeline |
| FocalTech Systems |
| Cheng Mei Materials |
FocalTech Systems and Cheng Mei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FocalTech Systems and Cheng Mei
The main advantage of trading using opposite FocalTech Systems and Cheng Mei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FocalTech Systems position performs unexpectedly, Cheng Mei 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 Cheng Mei will offset losses from the drop in Cheng Mei's long position.| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |