Correlation Between Fabrinet and Quantum Computing

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

By analyzing existing cross correlation between Fabrinet and Quantum Computing, you can compare the effects of market volatilities on Fabrinet and Quantum Computing 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 Quantum Computing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabrinet and Quantum Computing.

Diversification Opportunities for Fabrinet and Quantum Computing

-0.55

Correlation Coefficient

Fabrinet  Quantum Computing

Excellent diversification

The 3 months correlation between Fabrinet and Quantum is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and Quantum Computing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Computing 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 Quantum Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Computing has no effect on the direction of Fabrinet i.e., Fabrinet and Quantum Computing go up and down completely randomly.

Pair Corralation between Fabrinet and Quantum Computing

Allowing for the 90-day total investment horizon Fabrinet is expected to under-perform the Quantum Computing. But the stock apears to be less risky and, when comparing its historical volatility, Fabrinet is 10.09 times less risky than Quantum Computing. The stock trades about -0.07 of its potential returns per unit of risk. The Quantum Computing is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  675.00  in Quantum Computing on September 28, 2024 and sell it today you would earn a total of  1,150  from holding Quantum Computing or generate 170.44% return on investment over 90 days.

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

Fabrinet  vs.  Quantum Computing

Fabrinet

Risk-Adjusted Performance

0 of 100

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.

Quantum Computing

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum Computing are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Quantum Computing unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fabrinet and Quantum Computing

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

The idea behind Fabrinet and Quantum Computing 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.