Correlation Between FARO Technologies and Playstudios
Can any of the company-specific risk be diversified away by investing in both FARO Technologies and Playstudios 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 FARO Technologies and Playstudios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and Playstudios, you can compare the effects of market volatilities on FARO Technologies and Playstudios 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 FARO Technologies with a short position of Playstudios. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and Playstudios.
Diversification Opportunities for FARO Technologies and Playstudios
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FARO and Playstudios is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios and FARO Technologies 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 FARO Technologies are associated (or correlated) with Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of FARO Technologies i.e., FARO Technologies and Playstudios go up and down completely randomly.
Pair Corralation between FARO Technologies and Playstudios
Given the investment horizon of 90 days FARO Technologies is expected to generate 1.15 times more return on investment than Playstudios. However, FARO Technologies is 1.15 times more volatile than Playstudios. It trades about 0.09 of its potential returns per unit of risk. Playstudios is currently generating about -0.03 per unit of risk. If you would invest 1,790 in FARO Technologies on August 31, 2024 and sell it today you would earn a total of 837.00 from holding FARO Technologies or generate 46.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. Playstudios
Performance |
| Timeline |
| FARO Technologies |
| Playstudios |
FARO Technologies and Playstudios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and Playstudios
The main advantage of trading using opposite FARO Technologies and Playstudios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies position performs unexpectedly, Playstudios 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 Playstudios will offset losses from the drop in Playstudios' long position.| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
| Playstudios vs. SohuCom | Playstudios vs. Snail, Class A | Playstudios vs. Playtika Holding Corp | Playstudios vs. Golden Matrix Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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