Correlation Between FocalTech Systems and Micro Star

Can any of the company-specific risk be diversified away by investing in both FocalTech Systems and Micro Star 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 Micro Star 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 Micro Star International Co, you can compare the effects of market volatilities on FocalTech Systems and Micro Star 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 Micro Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of FocalTech Systems and Micro Star.

Diversification Opportunities for FocalTech Systems and Micro Star

0.17

Correlation Coefficient

FocalTech Systems  Micro Star

Average diversification

The 3 months correlation between FocalTech and Micro is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and Micro Star International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Star Internati 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 Micro Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Star Internati has no effect on the direction of FocalTech Systems i.e., FocalTech Systems and Micro Star go up and down completely randomly.

Pair Corralation between FocalTech Systems and Micro Star

Assuming the 90 days trading horizon FocalTech Systems Co is expected to generate 1.18 times more return on investment than Micro Star. However, FocalTech Systems is 1.18 times more volatile than Micro Star International Co. It trades about 0.16 of its potential returns per unit of risk. Micro Star International Co is currently generating about 0.0 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

FocalTech Systems Co  vs.  Micro Star International 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.

Micro Star Internati

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micro Star International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Micro Star is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with FocalTech Systems and Micro Star

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

The idea behind FocalTech Systems Co and Micro Star International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.