Correlation Between FocalTech Systems and Gigabyte Technology

Can any of the company-specific risk be diversified away by investing in both FocalTech Systems and Gigabyte Technology 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 FocalTech Systems and Gigabyte Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FocalTech Systems Co and Gigabyte Technology Co, you can compare the effects of market volatilities on FocalTech Systems and Gigabyte Technology 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 FocalTech Systems with a short position of Gigabyte Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of FocalTech Systems and Gigabyte Technology.

Diversification Opportunities for FocalTech Systems and Gigabyte Technology

0.59

Correlation Coefficient

FocalTech Systems  Gigabyte Technology

Very weak diversification

The 3 months correlation between FocalTech and Gigabyte is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and Gigabyte Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigabyte Technology and FocalTech Systems 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 FocalTech Systems Co are associated (or correlated) with Gigabyte Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigabyte Technology has no effect on the direction of FocalTech Systems i.e., FocalTech Systems and Gigabyte Technology go up and down completely randomly.

Pair Corralation between FocalTech Systems and Gigabyte Technology

Assuming the 90 days trading horizon FocalTech Systems Co is expected to generate 0.85 times more return on investment than Gigabyte Technology. However, FocalTech Systems Co is 1.17 times less risky than Gigabyte Technology. It trades about 0.16 of its potential returns per unit of risk. Gigabyte Technology Co is currently generating about 0.06 per unit of risk. If you would invest  7,580  in FocalTech Systems Co on September 15, 2024 and sell it today you would earn a total of  1,400  from holding FocalTech Systems Co or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FocalTech Systems Co  vs.  Gigabyte Technology Co

FocalTech Systems

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FocalTech Systems Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FocalTech Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Gigabyte Technology

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gigabyte Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gigabyte Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with FocalTech Systems and Gigabyte Technology

The main advantage of trading using opposite FocalTech Systems and Gigabyte Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FocalTech Systems position performs unexpectedly, Gigabyte Technology 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 Gigabyte Technology will offset losses from the drop in Gigabyte Technology's long position.

The idea behind FocalTech Systems Co and Gigabyte Technology Co 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.