Correlation Between FNSTech and ChipsMedia

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

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

Diversification Opportunities for FNSTech and ChipsMedia

0.68

Correlation Coefficient

FNSTech  ChipsMedia

Poor diversification

The 3 months correlation between FNSTech and ChipsMedia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and ChipsMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChipsMedia and FNSTech 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 FNSTech Co are associated (or correlated) with ChipsMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChipsMedia has no effect on the direction of FNSTech i.e., FNSTech and ChipsMedia go up and down completely randomly.

Pair Corralation between FNSTech and ChipsMedia

Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.06 times more return on investment than ChipsMedia. However, FNSTech is 1.06 times more volatile than ChipsMedia. It trades about -0.01 of its potential returns per unit of risk. ChipsMedia is currently generating about -0.08 per unit of risk. If you would invest  1,142,000  in FNSTech Co on September 3, 2024 and sell it today you would lose (325,000) from holding FNSTech Co or give up 28.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.37%
Values	Daily Returns

FNSTech Co  vs.  ChipsMedia

FNSTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FNSTech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ChipsMedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChipsMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with FNSTech and ChipsMedia

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

The idea behind FNSTech Co and ChipsMedia 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 Transaction History module to view history of all your transactions and understand their impact on performance.