Correlation Between Fabrinet and Eastman Kodak

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Can any of the company-specific risk be diversified away by investing in both Fabrinet and Eastman Kodak 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 Eastman Kodak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabrinet and Eastman Kodak Co, you can compare the effects of market volatilities on Fabrinet and Eastman Kodak 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 Eastman Kodak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabrinet and Eastman Kodak.

Diversification Opportunities for Fabrinet and Eastman Kodak

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Fabrinet and Eastman is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak 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 Eastman Kodak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Kodak has no effect on the direction of Fabrinet i.e., Fabrinet and Eastman Kodak go up and down completely randomly.

Pair Corralation between Fabrinet and Eastman Kodak

Allowing for the 90-day total investment horizon Fabrinet is expected to generate 0.69 times more return on investment than Eastman Kodak. However, Fabrinet is 1.45 times less risky than Eastman Kodak. It trades about 0.06 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.01 per unit of risk. If you would invest  9,649  in Fabrinet on December 30, 2023 and sell it today you would earn a total of  9,253  from holding Fabrinet or generate 95.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Fabrinet  vs.  Eastman Kodak Co

 Performance 
       Timeline  
Fabrinet 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Fabrinet are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fabrinet is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Eastman Kodak 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Fabrinet and Eastman Kodak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fabrinet and Eastman Kodak

The main advantage of trading using opposite Fabrinet and Eastman Kodak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabrinet position performs unexpectedly, Eastman Kodak 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 Eastman Kodak will offset losses from the drop in Eastman Kodak's long position.
The idea behind Fabrinet and Eastman Kodak 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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