Correlation Between Brighten Optix and FineMat Applied
Can any of the company-specific risk be diversified away by investing in both Brighten Optix and FineMat Applied 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 Brighten Optix and FineMat Applied into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighten Optix and FineMat Applied Materials, you can compare the effects of market volatilities on Brighten Optix and FineMat Applied 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 Brighten Optix with a short position of FineMat Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighten Optix and FineMat Applied.
Diversification Opportunities for Brighten Optix and FineMat Applied
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brighten and FineMat is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Brighten Optix and FineMat Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineMat Applied Materials and Brighten Optix 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 Brighten Optix are associated (or correlated) with FineMat Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineMat Applied Materials has no effect on the direction of Brighten Optix i.e., Brighten Optix and FineMat Applied go up and down completely randomly.
Pair Corralation between Brighten Optix and FineMat Applied
Assuming the 90 days trading horizon Brighten Optix is expected to under-perform the FineMat Applied. But the stock apears to be less risky and, when comparing its historical volatility, Brighten Optix is 2.29 times less risky than FineMat Applied. The stock trades about -0.11 of its potential returns per unit of risk. The FineMat Applied Materials is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,770 in FineMat Applied Materials on September 3, 2024 and sell it today you would lose (85.00) from holding FineMat Applied Materials or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighten Optix vs. FineMat Applied Materials
Performance |
| Timeline |
| Brighten Optix |
| FineMat Applied Materials |
Brighten Optix and FineMat Applied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighten Optix and FineMat Applied
The main advantage of trading using opposite Brighten Optix and FineMat Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighten Optix position performs unexpectedly, FineMat Applied 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 FineMat Applied will offset losses from the drop in FineMat Applied's long position.| Brighten Optix vs. GeneFerm Biotechnology Co | Brighten Optix vs. Grand Ocean Retail | Brighten Optix vs. Tait Marketing Distribution | Brighten Optix vs. Hi Lai Foods Co |
| FineMat Applied vs. Hon Hai Precision | FineMat Applied vs. Delta Electronics | FineMat Applied vs. LARGAN Precision Co | FineMat Applied vs. AU Optronics |
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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