Correlation Between DIC and FormFactor

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

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

Diversification Opportunities for DIC and FormFactor

-0.15

Correlation Coefficient

DIC  FormFactor

Good diversification

The 3 months correlation between DIC and FormFactor is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding DIC Corp. and FormFactor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FormFactor and DIC 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 DIC Corporation are associated (or correlated) with FormFactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FormFactor has no effect on the direction of DIC i.e., DIC and FormFactor go up and down completely randomly.

Pair Corralation between DIC and FormFactor

If you would invest  4,196  in FormFactor on October 11, 2024 and sell it today you would earn a total of  215.00  from holding FormFactor or generate 5.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

DIC Corp.  vs.  FormFactor

DIC Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DIC Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, DIC is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

FormFactor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with DIC and FormFactor

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

The idea behind DIC Corporation and FormFactor 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.