Correlation Between Stef SA and X Fab
Can any of the company-specific risk be diversified away by investing in both Stef SA 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 Stef SA and X Fab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and X Fab Silicon, you can compare the effects of market volatilities on Stef SA 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 Stef SA with a short position of X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and X Fab.
Diversification Opportunities for Stef SA and X Fab
Average diversification
The 3 months correlation between Stef and XFAB is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA 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 Stef SA 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 Stef 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 Stef SA i.e., Stef SA and X Fab go up and down completely randomly.
Pair Corralation between Stef SA and X Fab
Assuming the 90 days trading horizon Stef SA is expected to under-perform the X Fab. But the stock apears to be less risky and, when comparing its historical volatility, Stef SA is 2.53 times less risky than X Fab. The stock trades about -0.13 of its potential returns per unit of risk. The X Fab Silicon is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 440.00 in X Fab Silicon on September 13, 2024 and sell it today you would earn a total of 60.00 from holding X Fab Silicon or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stef SA vs. X Fab Silicon
Performance |
| Timeline |
| Stef SA |
| X Fab Silicon |
Stef SA and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and X Fab
The main advantage of trading using opposite Stef SA and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA 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 Stef SA and X Fab Silicon 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.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.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |