Correlation Between GlobalWafers and FIT Holding

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

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

Diversification Opportunities for GlobalWafers and FIT Holding

-0.4

Correlation Coefficient

GlobalWafers  FIT Holding

Very good diversification

The 3 months correlation between GlobalWafers and FIT is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and FIT Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT Holding and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with FIT Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT Holding has no effect on the direction of GlobalWafers i.e., GlobalWafers and FIT Holding go up and down completely randomly.

Pair Corralation between GlobalWafers and FIT Holding

Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the FIT Holding. But the stock apears to be less risky and, when comparing its historical volatility, GlobalWafers Co is 2.11 times less risky than FIT Holding. The stock trades about -0.38 of its potential returns per unit of risk. The FIT Holding Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,340  in FIT Holding Co on September 22, 2024 and sell it today you would lose (40.00) from holding FIT Holding Co or give up 0.63% of portfolio value over 90 days.

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

GlobalWafers Co  vs.  FIT Holding Co

GlobalWafers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalWafers Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

FIT Holding

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with GlobalWafers and FIT Holding

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

The idea behind GlobalWafers Co and FIT Holding 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.