Correlation Between EnviTec Biogas and X FAB
Can any of the company-specific risk be diversified away by investing in both EnviTec Biogas 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 EnviTec Biogas and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EnviTec Biogas AG and X FAB Silicon Foundries, you can compare the effects of market volatilities on EnviTec Biogas 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 EnviTec Biogas with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnviTec Biogas and X FAB.
Diversification Opportunities for EnviTec Biogas and X FAB
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EnviTec and XFB is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding EnviTec Biogas AG 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 EnviTec Biogas 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 EnviTec Biogas AG 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 EnviTec Biogas i.e., EnviTec Biogas and X FAB go up and down completely randomly.
Pair Corralation between EnviTec Biogas and X FAB
Assuming the 90 days horizon EnviTec Biogas is expected to generate 46.58 times less return on investment than X FAB. In addition to that, EnviTec Biogas is 1.03 times more volatile than X FAB Silicon Foundries. It trades about 0.0 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.05 per unit of volatility. If you would invest 451.00 in X FAB Silicon Foundries on December 9, 2024 and sell it today you would earn a total of 9.00 from holding X FAB Silicon Foundries or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EnviTec Biogas AG vs. X FAB Silicon Foundries
Performance |
| Timeline |
| EnviTec Biogas AG |
| X FAB Silicon |
EnviTec Biogas and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnviTec Biogas and X FAB
The main advantage of trading using opposite EnviTec Biogas and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnviTec Biogas 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.| EnviTec Biogas vs. AUTO TRADER ADR | ||
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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