Correlation Between Fabrinet and Ouster
Can any of the company-specific risk be diversified away by investing in both Fabrinet and Ouster 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 Ouster into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabrinet and Ouster Inc, you can compare the effects of market volatilities on Fabrinet and Ouster 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 Ouster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabrinet and Ouster.
Diversification Opportunities for Fabrinet and Ouster
Very weak diversification
The 3 months correlation between Fabrinet and Ouster is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and Ouster Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ouster Inc 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 Ouster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ouster Inc has no effect on the direction of Fabrinet i.e., Fabrinet and Ouster go up and down completely randomly.
Pair Corralation between Fabrinet and Ouster
Allowing for the 90-day total investment horizon Fabrinet is expected to under-perform the Ouster. But the stock apears to be less risky and, when comparing its historical volatility, Fabrinet is 1.94 times less risky than Ouster. The stock trades about -0.05 of its potential returns per unit of risk. The Ouster Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 743.00 in Ouster Inc on August 27, 2024 and sell it today you would earn a total of 210.00 from holding Ouster Inc or generate 28.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabrinet vs. Ouster Inc
Performance |
| Timeline |
| Fabrinet |
| Ouster Inc |
Fabrinet and Ouster Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabrinet and Ouster
The main advantage of trading using opposite Fabrinet and Ouster positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabrinet position performs unexpectedly, Ouster 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 Ouster will offset losses from the drop in Ouster's long position.The idea behind Fabrinet and Ouster Inc 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.| Ouster vs. KULR Technology Group | Ouster vs. LightPath Technologies | Ouster vs. Daktronics | Ouster vs. Kopin |
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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