Correlation Between Fabrinet and Iveda Solutions
Can any of the company-specific risk be diversified away by investing in both Fabrinet and Iveda Solutions 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 Iveda Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabrinet and Iveda Solutions, you can compare the effects of market volatilities on Fabrinet and Iveda Solutions 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 Iveda Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabrinet and Iveda Solutions.
Diversification Opportunities for Fabrinet and Iveda Solutions
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fabrinet and Iveda is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and Iveda Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions 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 Iveda Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iveda Solutions has no effect on the direction of Fabrinet i.e., Fabrinet and Iveda Solutions go up and down completely randomly.
Pair Corralation between Fabrinet and Iveda Solutions
Allowing for the 90-day total investment horizon Fabrinet is expected to generate 80.61 times less return on investment than Iveda Solutions. But when comparing it to its historical volatility, Fabrinet is 3.95 times less risky than Iveda Solutions. It trades about 0.01 of its potential returns per unit of risk. Iveda Solutions is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 161.00 in Iveda Solutions on September 18, 2024 and sell it today you would earn a total of 152.00 from holding Iveda Solutions or generate 94.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabrinet vs. Iveda Solutions
Performance |
| Timeline |
| Fabrinet |
| Iveda Solutions |
Fabrinet and Iveda Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabrinet and Iveda Solutions
The main advantage of trading using opposite Fabrinet and Iveda Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabrinet position performs unexpectedly, Iveda Solutions 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 Iveda Solutions will offset losses from the drop in Iveda Solutions' long position.The idea behind Fabrinet and Iveda Solutions 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.| Iveda Solutions vs. Guardforce AI Co | Iveda Solutions vs. Bridger Aerospace Group | Iveda Solutions vs. Supercom | Iveda Solutions vs. Guardforce AI Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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