Correlation Between Fabrinet and Vast Renewables

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

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

Diversification Opportunities for Fabrinet and Vast Renewables

-0.83

Correlation Coefficient

Fabrinet  Vast Renewables

Pay attention - limited upside

The 3 months correlation between Fabrinet and Vast is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fabrinet and Vast Renewables Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vast Renewables 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 Vast Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vast Renewables has no effect on the direction of Fabrinet i.e., Fabrinet and Vast Renewables go up and down completely randomly.

Pair Corralation between Fabrinet and Vast Renewables

Allowing for the 90-day total investment horizon Fabrinet is expected to generate 0.14 times more return on investment than Vast Renewables. However, Fabrinet is 7.3 times less risky than Vast Renewables. It trades about 0.25 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about -0.26 per unit of risk. If you would invest  22,090  in Fabrinet on May 4, 2025 and sell it today you would earn a total of  9,430  from holding Fabrinet or generate 42.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	35.48%
Values	Daily Returns

Fabrinet  vs.  Vast Renewables Limited

Fabrinet

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fabrinet are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fabrinet displayed solid returns over the last few months and may actually be approaching a breakup point.

Vast Renewables

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fabrinet and Vast Renewables

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

The idea behind Fabrinet and Vast Renewables Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.