Correlation Between Global Lighting and FSP Technology
Can any of the company-specific risk be diversified away by investing in both Global Lighting and FSP Technology 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 Global Lighting and FSP Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Lighting Technologies and FSP Technology, you can compare the effects of market volatilities on Global Lighting and FSP Technology 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 Global Lighting with a short position of FSP Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Lighting and FSP Technology.
Diversification Opportunities for Global Lighting and FSP Technology
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and FSP is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global Lighting Technologies and FSP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSP Technology and Global Lighting 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 Global Lighting Technologies are associated (or correlated) with FSP Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSP Technology has no effect on the direction of Global Lighting i.e., Global Lighting and FSP Technology go up and down completely randomly.
Pair Corralation between Global Lighting and FSP Technology
Assuming the 90 days trading horizon Global Lighting Technologies is expected to generate 1.08 times more return on investment than FSP Technology. However, Global Lighting is 1.08 times more volatile than FSP Technology. It trades about 0.01 of its potential returns per unit of risk. FSP Technology is currently generating about 0.01 per unit of risk. If you would invest 6,170 in Global Lighting Technologies on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Global Lighting Technologies or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Lighting Technologies vs. FSP Technology
Performance |
| Timeline |
| Global Lighting Tech |
| FSP Technology |
Global Lighting and FSP Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Lighting and FSP Technology
The main advantage of trading using opposite Global Lighting and FSP Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Lighting position performs unexpectedly, FSP Technology 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 FSP Technology will offset losses from the drop in FSP Technology's long position.| Global Lighting vs. Arcadyan Technology Corp | Global Lighting vs. Zhen Ding Technology | Global Lighting vs. Taiwan Surface Mounting | Global Lighting vs. Flexium Interconnect |
| FSP Technology vs. Universal Microelectronics Co | FSP Technology vs. AVerMedia Technologies | FSP Technology vs. Symtek Automation Asia | FSP Technology vs. WiseChip Semiconductor |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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