Correlation Between Aedas Homes and X FAB

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Can any of the company-specific risk be diversified away by investing in both Aedas Homes 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 Aedas Homes and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aedas Homes SA and X FAB Silicon Foundries, you can compare the effects of market volatilities on Aedas Homes 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 Aedas Homes with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aedas Homes and X FAB.

Diversification Opportunities for Aedas Homes and X FAB

AedasXFBDiversified AwayAedasXFBDiversified Away100%
0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Aedas and XFB is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aedas Homes SA 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 Aedas Homes 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 Aedas Homes SA 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 Aedas Homes i.e., Aedas Homes and X FAB go up and down completely randomly.

Pair Corralation between Aedas Homes and X FAB

Assuming the 90 days horizon Aedas Homes SA is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Aedas Homes SA is 1.68 times less risky than X FAB. The stock trades about -0.09 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  503.00  in X FAB Silicon Foundries on November 25, 2024 and sell it today you would earn a total of  16.00  from holding X FAB Silicon Foundries or generate 3.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Aedas Homes SA  vs.  X FAB Silicon Foundries

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510152025
JavaScript chart by amCharts 3.21.151QK XFB
       Timeline  
Aedas Homes SA 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Aedas Homes SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aedas Homes reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb24252627282930
X FAB Silicon 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, X FAB exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4.44.64.855.25.4

Aedas Homes and X FAB Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.7-4.27-2.84-1.410.01.482.984.495.99 0.020.040.060.080.100.12
JavaScript chart by amCharts 3.21.151QK XFB
       Returns  

Pair Trading with Aedas Homes and X FAB

The main advantage of trading using opposite Aedas Homes and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aedas Homes 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.
The idea behind Aedas Homes SA and X FAB Silicon Foundries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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