Correlation Between Fabrinet and Ebang International

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

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

Diversification Opportunities for Fabrinet and Ebang International

0.5

Correlation Coefficient

Fabrinet  Ebang International

Very weak diversification

The 3 months correlation between Fabrinet and Ebang is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and Ebang International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebang International and Fabrinet 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 Fabrinet are associated (or correlated) with Ebang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebang International has no effect on the direction of Fabrinet i.e., Fabrinet and Ebang International go up and down completely randomly.

Pair Corralation between Fabrinet and Ebang International

Allowing for the 90-day total investment horizon Fabrinet is expected to generate 1.26 times more return on investment than Ebang International. However, Fabrinet is 1.26 times more volatile than Ebang International Holdings. It trades about 0.01 of its potential returns per unit of risk. Ebang International Holdings is currently generating about -0.16 per unit of risk. If you would invest  21,476  in Fabrinet on December 28, 2024 and sell it today you would lose (816.00) from holding Fabrinet or give up 3.8% of portfolio value over 90 days.

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

Fabrinet  vs.  Ebang International Holdings

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 recent stock price disarray, may contribute to short-term losses for the investors.

Ebang International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ebang International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fabrinet and Ebang International

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

The idea behind Fabrinet and Ebang International Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.