Correlation Between Align Technology and X-FAB Silicon
Can any of the company-specific risk be diversified away by investing in both Align Technology and X-FAB Silicon 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 Align Technology and X-FAB Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Align Technology and X FAB Silicon Foundries, you can compare the effects of market volatilities on Align Technology and X-FAB Silicon 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 Align Technology with a short position of X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Align Technology and X-FAB Silicon.
Diversification Opportunities for Align Technology and X-FAB Silicon
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Align and X-FAB is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology 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 Align Technology 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 Align Technology are associated (or correlated) with X-FAB Silicon. 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 Align Technology i.e., Align Technology and X-FAB Silicon go up and down completely randomly.
Pair Corralation between Align Technology and X-FAB Silicon
Assuming the 90 days horizon Align Technology is expected to generate 0.82 times more return on investment than X-FAB Silicon. However, Align Technology is 1.22 times less risky than X-FAB Silicon. It trades about -0.05 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.04 per unit of risk. If you would invest 28,990 in Align Technology on October 22, 2024 and sell it today you would lose (7,210) from holding Align Technology or give up 24.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Align Technology vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Align Technology |
| X FAB Silicon |
Align Technology and X-FAB Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Align Technology and X-FAB Silicon
The main advantage of trading using opposite Align Technology and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Align Technology position performs unexpectedly, X-FAB Silicon 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 Silicon will offset losses from the drop in X-FAB Silicon's long position.| Align Technology vs. AGRICULTBK HADR25 YC | Align Technology vs. DAIDO METAL TD | Align Technology vs. Jacquet Metal Service | Align Technology vs. Tokyu Construction Co |
| X-FAB Silicon vs. PARKEN Sport Entertainment | X-FAB Silicon vs. GigaMedia | X-FAB Silicon vs. CSSC Offshore Marine | X-FAB Silicon vs. Live Nation Entertainment |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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