Correlation Between FormFactor and Cohen Circle

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

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

Diversification Opportunities for FormFactor and Cohen Circle

-0.52

Correlation Coefficient

FormFactor  Cohen Circle

Excellent diversification

The 3 months correlation between FormFactor and Cohen is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Cohen Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cohen Circle Acquisition and FormFactor 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 FormFactor are associated (or correlated) with Cohen Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cohen Circle Acquisition has no effect on the direction of FormFactor i.e., FormFactor and Cohen Circle go up and down completely randomly.

Pair Corralation between FormFactor and Cohen Circle

Given the investment horizon of 90 days FormFactor is expected to under-perform the Cohen Circle. But the stock apears to be less risky and, when comparing its historical volatility, FormFactor is 6.92 times less risky than Cohen Circle. The stock trades about -0.24 of its potential returns per unit of risk. The Cohen Circle Acquisition is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Cohen Circle Acquisition on October 27, 2024 and sell it today you would earn a total of  32.00  from holding Cohen Circle Acquisition or generate 72.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

FormFactor  vs.  Cohen Circle Acquisition

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.

Cohen Circle Acquisition

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cohen Circle Acquisition are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Cohen Circle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FormFactor and Cohen Circle

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

The idea behind FormFactor and Cohen Circle Acquisition 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.