Correlation Between CN MODERN and X FAB
Can any of the company-specific risk be diversified away by investing in both CN MODERN and X FAB 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 CN MODERN and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and X FAB Silicon Foundries, you can compare the effects of market volatilities on CN MODERN and X FAB 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 CN MODERN with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and X FAB.
Diversification Opportunities for CN MODERN and X FAB
Very weak diversification
The 3 months correlation between 07M and XFB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of CN MODERN i.e., CN MODERN and X FAB go up and down completely randomly.
Pair Corralation between CN MODERN and X FAB
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 1.1 times more return on investment than X FAB. However, CN MODERN is 1.1 times more volatile than X FAB Silicon Foundries. It trades about 0.01 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.03 per unit of risk. If you would invest 10.00 in CN MODERN DAIRY on October 27, 2024 and sell it today you would earn a total of 0.00 from holding CN MODERN DAIRY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. X FAB Silicon Foundries
Performance |
| Timeline |
| CN MODERN DAIRY |
| X FAB Silicon |
CN MODERN and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and X FAB
The main advantage of trading using opposite CN MODERN and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| CN MODERN vs. Micron Technology | CN MODERN vs. CITIC Telecom International | CN MODERN vs. Singapore Telecommunications Limited | CN MODERN vs. SCOTT TECHNOLOGY |
| X FAB vs. Q2M Managementberatung AG | X FAB vs. SALESFORCE INC CDR | X FAB vs. Jacquet Metal Service | X FAB vs. MCEWEN MINING INC |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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