Correlation Between Cipherlab and Foxconn Technology

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

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

Diversification Opportunities for Cipherlab and Foxconn Technology

-0.17

Correlation Coefficient

Cipherlab  Foxconn Technology

Good diversification

The 3 months correlation between Cipherlab and Foxconn is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cipherlab Co and Foxconn Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxconn Technology and Cipherlab 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 Cipherlab Co are associated (or correlated) with Foxconn Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxconn Technology has no effect on the direction of Cipherlab i.e., Cipherlab and Foxconn Technology go up and down completely randomly.

Pair Corralation between Cipherlab and Foxconn Technology

Assuming the 90 days trading horizon Cipherlab Co is expected to under-perform the Foxconn Technology. But the stock apears to be less risky and, when comparing its historical volatility, Cipherlab Co is 1.96 times less risky than Foxconn Technology. The stock trades about -0.1 of its potential returns per unit of risk. The Foxconn Technology Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,640  in Foxconn Technology Co on September 25, 2024 and sell it today you would earn a total of  1,100  from holding Foxconn Technology Co or generate 16.57% return on investment over 90 days.

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

Cipherlab Co  vs.  Foxconn Technology Co

Cipherlab

Risk-Adjusted Performance

0 of 100

Very Weak

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

Foxconn Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foxconn Technology Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Foxconn Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cipherlab and Foxconn Technology

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

The idea behind Cipherlab Co and Foxconn Technology Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.