Correlation Between AmpliTech and Fabrinet

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

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

Diversification Opportunities for AmpliTech and Fabrinet

0.24

Correlation Coefficient

AmpliTech  Fabrinet

Modest diversification

The 3 months correlation between AmpliTech and Fabrinet is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AmpliTech Group and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and AmpliTech 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 AmpliTech Group are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of AmpliTech i.e., AmpliTech and Fabrinet go up and down completely randomly.

Pair Corralation between AmpliTech and Fabrinet

Assuming the 90 days horizon AmpliTech Group is expected to under-perform the Fabrinet. In addition to that, AmpliTech is 3.33 times more volatile than Fabrinet. It trades about -0.01 of its total potential returns per unit of risk. Fabrinet is currently generating about -0.01 per unit of volatility. If you would invest  21,476  in Fabrinet on December 30, 2024 and sell it today you would lose (1,862) from holding Fabrinet or give up 8.67% of portfolio value over 90 days.

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

AmpliTech Group  vs.  Fabrinet

AmpliTech Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days AmpliTech Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Fabrinet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fabrinet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fabrinet is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AmpliTech and Fabrinet

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

The idea behind AmpliTech Group and Fabrinet 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.