Correlation Between X FAB and Hardide PLC
Can any of the company-specific risk be diversified away by investing in both X FAB and Hardide PLC 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 X FAB and Hardide PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Hardide PLC, you can compare the effects of market volatilities on X FAB and Hardide PLC 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 X FAB with a short position of Hardide PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Hardide PLC.
Diversification Opportunities for X FAB and Hardide PLC
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0ROZ and Hardide is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Hardide PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hardide PLC and X FAB 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 X FAB Silicon Foundries are associated (or correlated) with Hardide PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hardide PLC has no effect on the direction of X FAB i.e., X FAB and Hardide PLC go up and down completely randomly.
Pair Corralation between X FAB and Hardide PLC
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.08 times more return on investment than Hardide PLC. However, X FAB is 1.08 times more volatile than Hardide PLC. It trades about -0.14 of its potential returns per unit of risk. Hardide PLC is currently generating about -0.2 per unit of risk. If you would invest 512.00 in X FAB Silicon Foundries on August 30, 2024 and sell it today you would lose (85.00) from holding X FAB Silicon Foundries or give up 16.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Hardide PLC
Performance |
| Timeline |
| X FAB Silicon |
| Hardide PLC |
X FAB and Hardide PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Hardide PLC
The main advantage of trading using opposite X FAB and Hardide PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Hardide PLC 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 Hardide PLC will offset losses from the drop in Hardide PLC's long position.| X FAB vs. Take Two Interactive Software | X FAB vs. bet at home AG | X FAB vs. Flow Traders NV | X FAB vs. Cognizant Technology Solutions |
| Hardide PLC vs. Gamma Communications PLC | Hardide PLC vs. MTI Wireless Edge | Hardide PLC vs. Cairn Homes PLC | Hardide PLC vs. X FAB Silicon Foundries |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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