Correlation Between Fabrinet and SatixFy Communications

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

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

Diversification Opportunities for Fabrinet and SatixFy Communications

-0.23

Correlation Coefficient

Fabrinet  SatixFy Communications

Very good diversification

The 3 months correlation between Fabrinet and SatixFy is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and SatixFy Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SatixFy Communications 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 SatixFy Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SatixFy Communications has no effect on the direction of Fabrinet i.e., Fabrinet and SatixFy Communications go up and down completely randomly.

Pair Corralation between Fabrinet and SatixFy Communications

Allowing for the 90-day total investment horizon Fabrinet is expected to generate 2.55 times less return on investment than SatixFy Communications. But when comparing it to its historical volatility, Fabrinet is 1.49 times less risky than SatixFy Communications. It trades about 0.05 of its potential returns per unit of risk. SatixFy Communications is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  74.00  in SatixFy Communications on September 12, 2024 and sell it today you would earn a total of  18.00  from holding SatixFy Communications or generate 24.32% return on investment over 90 days.

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

Fabrinet  vs.  SatixFy Communications

Fabrinet

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fabrinet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fabrinet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SatixFy Communications

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Fabrinet and SatixFy Communications

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

The idea behind Fabrinet and SatixFy Communications 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.