Correlation Between Airgain and Fabrinet

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

Diversification Opportunities for Airgain and Fabrinet

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Airgain and Fabrinet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Airgain and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and Airgain 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 Airgain are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Airgain i.e., Airgain and Fabrinet go up and down completely randomly.

Pair Corralation between Airgain and Fabrinet

Given the investment horizon of 90 days Airgain is expected to under-perform the Fabrinet. But the stock apears to be less risky and, when comparing its historical volatility, Airgain is 1.11 times less risky than Fabrinet. The stock trades about -0.01 of its potential returns per unit of risk. The Fabrinet is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  24,230  in Fabrinet on September 5, 2024 and sell it today you would lose (51.00) from holding Fabrinet or give up 0.21% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Airgain  vs.  Fabrinet

 Performance 
       Timeline  
Airgain 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Airgain are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Airgain reported solid returns over the last few months and may actually be approaching a breakup point.
Fabrinet 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Fabrinet are ranked lower than 3 (%) 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.

Airgain and Fabrinet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Airgain and Fabrinet

The main advantage of trading using opposite Airgain and Fabrinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airgain position performs unexpectedly, Fabrinet 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 Fabrinet will offset losses from the drop in Fabrinet's long position.
The idea behind Airgain and Fabrinet 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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