Correlation Between FocalTech Systems and ASRock

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

Diversification Opportunities for FocalTech Systems and ASRock

0.58

Correlation Coefficient

FocalTech Systems  ASRock

Very weak diversification

The 3 months correlation between FocalTech and ASRock is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and ASRock Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASRock Inc 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 ASRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASRock Inc has no effect on the direction of FocalTech Systems i.e., FocalTech Systems and ASRock go up and down completely randomly.

Pair Corralation between FocalTech Systems and ASRock

Assuming the 90 days trading horizon FocalTech Systems is expected to generate 1.13 times less return on investment than ASRock. But when comparing it to its historical volatility, FocalTech Systems Co is 1.38 times less risky than ASRock. It trades about 0.16 of its potential returns per unit of risk. ASRock Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  20,450  in ASRock Inc on September 15, 2024 and sell it today you would earn a total of  4,150  from holding ASRock Inc or generate 20.29% 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.  ASRock Inc

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.

ASRock Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASRock Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ASRock showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FocalTech Systems and ASRock

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

The idea behind FocalTech Systems Co and ASRock 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .