Correlation Between Mauna Kea and X Fab
Can any of the company-specific risk be diversified away by investing in both Mauna Kea 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 Mauna Kea and X Fab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mauna Kea Technologies and X Fab Silicon, you can compare the effects of market volatilities on Mauna Kea 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 Mauna Kea with a short position of X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mauna Kea and X Fab.
Diversification Opportunities for Mauna Kea and X Fab
Poor diversification
The 3 months correlation between Mauna and XFAB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mauna Kea Technologies and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon and Mauna Kea 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 Mauna Kea Technologies 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 Mauna Kea i.e., Mauna Kea and X Fab go up and down completely randomly.
Pair Corralation between Mauna Kea and X Fab
Assuming the 90 days trading horizon Mauna Kea Technologies is expected to under-perform the X Fab. In addition to that, Mauna Kea is 1.55 times more volatile than X Fab Silicon. It trades about -0.15 of its total potential returns per unit of risk. X Fab Silicon is currently generating about -0.09 per unit of volatility. If you would invest 652.00 in X Fab Silicon on September 1, 2024 and sell it today you would lose (202.00) from holding X Fab Silicon or give up 30.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mauna Kea Technologies vs. X Fab Silicon
Performance |
| Timeline |
| Mauna Kea Technologies |
| X Fab Silicon |
Mauna Kea and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mauna Kea and X Fab
The main advantage of trading using opposite Mauna Kea and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mauna Kea 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.| Mauna Kea vs. LVMH Mot Hennessy | Mauna Kea vs. LOreal SA | Mauna Kea vs. Hermes International SCA | Mauna Kea vs. Manitou BF SA |
| X Fab vs. Chargeurs SA | X Fab vs. Straumann Holding AG | X Fab vs. Manitou BF SA | X Fab vs. Amundi Index Solutions |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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