Correlation Between Fabrinet and BIO Key
Can any of the company-specific risk be diversified away by investing in both Fabrinet and BIO Key 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 Fabrinet and BIO Key into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabrinet and BIO Key International, you can compare the effects of market volatilities on Fabrinet and BIO Key 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 Fabrinet with a short position of BIO Key. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabrinet and BIO Key.
Diversification Opportunities for Fabrinet and BIO Key
Very good diversification
The 3 months correlation between Fabrinet and BIO is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and BIO Key International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO Key International and Fabrinet 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 Fabrinet are associated (or correlated) with BIO Key. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO Key International has no effect on the direction of Fabrinet i.e., Fabrinet and BIO Key go up and down completely randomly.
Pair Corralation between Fabrinet and BIO Key
Allowing for the 90-day total investment horizon Fabrinet is expected to generate 32.92 times less return on investment than BIO Key. But when comparing it to its historical volatility, Fabrinet is 3.7 times less risky than BIO Key. It trades about 0.0 of its potential returns per unit of risk. BIO Key International is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 191.00 in BIO Key International on August 28, 2024 and sell it today you would lose (99.00) from holding BIO Key International or give up 51.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabrinet vs. BIO Key International
Performance |
| Timeline |
| Fabrinet |
| BIO Key International |
Fabrinet and BIO Key Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabrinet and BIO Key
The main advantage of trading using opposite Fabrinet and BIO Key positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabrinet position performs unexpectedly, BIO Key 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 BIO Key will offset losses from the drop in BIO Key's long position.The idea behind Fabrinet and BIO Key International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BIO Key vs. LogicMark | BIO Key vs. SSC Security Services | BIO Key vs. ICTS International NV | BIO Key vs. Senstar Technologies |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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