Correlation Between Westlake Chemical and X FAB
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical 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 Westlake Chemical and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical Corp and X FAB Silicon Foundries, you can compare the effects of market volatilities on Westlake Chemical 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 Westlake Chemical with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and X FAB.
Diversification Opportunities for Westlake Chemical and X FAB
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westlake and 0ROZ is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp 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 Westlake Chemical 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 Westlake Chemical Corp 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 Westlake Chemical i.e., Westlake Chemical and X FAB go up and down completely randomly.
Pair Corralation between Westlake Chemical and X FAB
Assuming the 90 days trading horizon Westlake Chemical Corp is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Westlake Chemical Corp is 1.4 times less risky than X FAB. The stock trades about -0.04 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 435.00 in X FAB Silicon Foundries on September 1, 2024 and sell it today you would earn a total of 1.00 from holding X FAB Silicon Foundries or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Westlake Chemical Corp vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Westlake Chemical Corp |
| X FAB Silicon |
Westlake Chemical and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and X FAB
The main advantage of trading using opposite Westlake Chemical and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical 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.| Westlake Chemical vs. Empire Metals Limited | Westlake Chemical vs. Silvercorp Metals | Westlake Chemical vs. Gaztransport et Technigaz | Westlake Chemical vs. GreenX Metals |
| X FAB vs. Gamma Communications PLC | X FAB vs. Dalata Hotel Group | X FAB vs. Zegona Communications Plc | X FAB vs. Gaztransport et Technigaz |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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