Correlation Between FormFactor and Cypress Semiconductor

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

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

Diversification Opportunities for FormFactor and Cypress Semiconductor

0.0

Correlation Coefficient

FormFactor  Cypress Semiconductor

Pay attention - limited upside

The 3 months correlation between FormFactor and Cypress is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FormFactor and Cypress Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cypress Semiconductor 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 Cypress Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cypress Semiconductor has no effect on the direction of FormFactor i.e., FormFactor and Cypress Semiconductor go up and down completely randomly.

Pair Corralation between FormFactor and Cypress Semiconductor

If you would invest (100.00) in Cypress Semiconductor on January 21, 2024 and sell it today you would earn a total of  100.00  from holding Cypress Semiconductor or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

FormFactor  vs.  Cypress Semiconductor

FormFactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FormFactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FormFactor is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Cypress Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cypress Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cypress Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FormFactor and Cypress Semiconductor

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

The idea behind FormFactor and Cypress Semiconductor 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.