Correlation Between Sino American and Faraday Technology
Can any of the company-specific risk be diversified away by investing in both Sino American 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 Sino American and Faraday Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Silicon Products and Faraday Technology Corp, you can compare the effects of market volatilities on Sino American 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 Sino American with a short position of Faraday Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Faraday Technology.
Diversification Opportunities for Sino American and Faraday Technology
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sino and Faraday is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Silicon Products 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 Sino American 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 Sino American Silicon Products 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 Sino American i.e., Sino American and Faraday Technology go up and down completely randomly.
Pair Corralation between Sino American and Faraday Technology
Assuming the 90 days trading horizon Sino American Silicon Products is expected to under-perform the Faraday Technology. But the stock apears to be less risky and, when comparing its historical volatility, Sino American Silicon Products is 1.79 times less risky than Faraday Technology. The stock trades about -0.14 of its potential returns per unit of risk. The Faraday Technology Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 29,650 in Faraday Technology Corp on September 1, 2024 and sell it today you would lose (7,450) from holding Faraday Technology Corp or give up 25.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sino American Silicon Products vs. Faraday Technology Corp
Performance |
| Timeline |
| Sino American Silicon |
| Faraday Technology Corp |
Sino American and Faraday Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and Faraday Technology
The main advantage of trading using opposite Sino American and Faraday Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American 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.| Sino American vs. Powertech Technology | Sino American vs. Formosa Sumco Technology | Sino American vs. Radiant Opto Electronics Corp | Sino American vs. Faraday Technology Corp |
| 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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