Correlation Between FormFactor and Safe

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

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

Diversification Opportunities for FormFactor and Safe

0.57

Correlation Coefficient

FormFactor  Safe

Very weak diversification

The 3 months correlation between FormFactor and Safe is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Safe and Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe and Green 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 Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe and Green has no effect on the direction of FormFactor i.e., FormFactor and Safe go up and down completely randomly.

Pair Corralation between FormFactor and Safe

Given the investment horizon of 90 days FormFactor is expected to generate 0.37 times more return on investment than Safe. However, FormFactor is 2.69 times less risky than Safe. It trades about 0.0 of its potential returns per unit of risk. Safe and Green is currently generating about -0.1 per unit of risk. If you would invest  4,446  in FormFactor on September 4, 2024 and sell it today you would lose (190.00) from holding FormFactor or give up 4.27% of portfolio value over 90 days.

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

FormFactor  vs.  Safe and Green

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.

Safe and Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with FormFactor and Safe

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

The idea behind FormFactor and Safe and Green 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.