Correlation Between Etron Technology and Faraday Technology
Can any of the company-specific risk be diversified away by investing in both Etron Technology and Faraday 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 Etron Technology and Faraday Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Etron Technology and Faraday Technology Corp, you can compare the effects of market volatilities on Etron Technology and Faraday 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 Etron Technology with a short position of Faraday Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Etron Technology and Faraday Technology.
Diversification Opportunities for Etron Technology and Faraday Technology
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Etron and Faraday is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Etron Technology and Faraday Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Technology Corp and Etron 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 Etron Technology are associated (or correlated) with Faraday Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Technology Corp has no effect on the direction of Etron Technology i.e., Etron Technology and Faraday Technology go up and down completely randomly.
Pair Corralation between Etron Technology and Faraday Technology
Assuming the 90 days trading horizon Etron Technology is expected to under-perform the Faraday Technology. But the stock apears to be less risky and, when comparing its historical volatility, Etron Technology is 1.31 times less risky than Faraday Technology. The stock trades about 0.0 of its potential returns per unit of risk. The Faraday Technology Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 17,150 in Faraday Technology Corp on September 5, 2024 and sell it today you would earn a total of 4,900 from holding Faraday Technology Corp or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Etron Technology vs. Faraday Technology Corp
Performance |
| Timeline |
| Etron Technology |
| Faraday Technology Corp |
Etron Technology and Faraday Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Etron Technology and Faraday Technology
The main advantage of trading using opposite Etron Technology and Faraday Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Etron Technology position performs unexpectedly, Faraday 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 Faraday Technology will offset losses from the drop in Faraday Technology's long position.| Etron Technology vs. Sunplus Technology Co | Etron Technology vs. Realtek Semiconductor Corp | Etron Technology vs. Winbond Electronics Corp | Etron Technology vs. VIA Technologies |
| Faraday Technology vs. Global Unichip Corp | Faraday Technology vs. Novatek Microelectronics Corp | Faraday Technology vs. Realtek Semiconductor Corp | Faraday Technology vs. Unimicron Technology 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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