Correlation Between Alpha En and Fabrinet
Can any of the company-specific risk be diversified away by investing in both Alpha En and Fabrinet 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 Alpha En and Fabrinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between alpha En and Fabrinet, you can compare the effects of market volatilities on Alpha En and Fabrinet 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 Alpha En with a short position of Fabrinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha En and Fabrinet.
Diversification Opportunities for Alpha En and Fabrinet
Pay attention - limited upside
The 3 months correlation between Alpha and Fabrinet is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding alpha En and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and Alpha En 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 alpha En are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Alpha En i.e., Alpha En and Fabrinet go up and down completely randomly.
Pair Corralation between Alpha En and Fabrinet
Given the investment horizon of 90 days alpha En is expected to under-perform the Fabrinet. In addition to that, Alpha En is 1.34 times more volatile than Fabrinet. It trades about -0.06 of its total potential returns per unit of risk. Fabrinet is currently generating about 0.04 per unit of volatility. If you would invest 17,096 in Fabrinet on November 5, 2024 and sell it today you would earn a total of 4,525 from holding Fabrinet or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.65% |
| Values | Daily Returns |
alpha En vs. Fabrinet
Performance |
| Timeline |
| alpha En |
| Fabrinet |
Alpha En and Fabrinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha En and Fabrinet
The main advantage of trading using opposite Alpha En and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha En position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.| Alpha En vs. Alps Electric Co | Alpha En vs. Bitmine Immersion Technologies | Alpha En vs. American Aires | Alpha En vs. AT S Austria |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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