Correlation Between FormFactor and Ambarella

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

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

Diversification Opportunities for FormFactor and Ambarella

0.62

Correlation Coefficient

FormFactor  Ambarella

Poor diversification

The 3 months correlation between FormFactor and Ambarella is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Ambarella in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambarella 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 Ambarella. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambarella has no effect on the direction of FormFactor i.e., FormFactor and Ambarella go up and down completely randomly.

Pair Corralation between FormFactor and Ambarella

Given the investment horizon of 90 days FormFactor is expected to generate 1.23 times more return on investment than Ambarella. However, FormFactor is 1.23 times more volatile than Ambarella. It trades about 0.22 of its potential returns per unit of risk. Ambarella is currently generating about 0.12 per unit of risk. If you would invest  2,798  in FormFactor on August 7, 2025 and sell it today you would earn a total of  2,374  from holding FormFactor or generate 84.85% return on investment over 90 days.

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

FormFactor  vs.  Ambarella

FormFactor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FormFactor are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FormFactor displayed solid returns over the last few months and may actually be approaching a breakup point.

Ambarella

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ambarella are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Ambarella sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FormFactor and Ambarella

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

The idea behind FormFactor and Ambarella 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.