Correlation Between FormFactor and Alpha

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

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

Diversification Opportunities for FormFactor and Alpha

0.5

Correlation Coefficient

FormFactor  Alpha

Very weak diversification

The 3 months correlation between FormFactor and Alpha is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Alpha and Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha and Omega 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 Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha and Omega has no effect on the direction of FormFactor i.e., FormFactor and Alpha go up and down completely randomly.

Pair Corralation between FormFactor and Alpha

Given the investment horizon of 90 days FormFactor is expected to under-perform the Alpha. In addition to that, FormFactor is 1.06 times more volatile than Alpha and Omega. It trades about -0.04 of its total potential returns per unit of risk. Alpha and Omega is currently generating about 0.04 per unit of volatility. If you would invest  2,479  in Alpha and Omega on May 13, 2025 and sell it today you would earn a total of  104.00  from holding Alpha and Omega or generate 4.2% return on investment over 90 days.

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

FormFactor  vs.  Alpha and Omega

FormFactor

Risk-Adjusted Performance

Weakest

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Alpha and Omega

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha and Omega are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Alpha may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with FormFactor and Alpha

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

The idea behind FormFactor and Alpha and Omega 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.