Correlation Between X Fab and Mauna Kea
Can any of the company-specific risk be diversified away by investing in both X Fab and Mauna Kea 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 X Fab and Mauna Kea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Fab Silicon and Mauna Kea Technologies, you can compare the effects of market volatilities on X Fab and Mauna Kea 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 X Fab with a short position of Mauna Kea. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and Mauna Kea.
Diversification Opportunities for X Fab and Mauna Kea
Poor diversification
The 3 months correlation between XFAB and Mauna is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and Mauna Kea Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mauna Kea Technologies and X Fab 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 X Fab Silicon are associated (or correlated) with Mauna Kea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mauna Kea Technologies has no effect on the direction of X Fab i.e., X Fab and Mauna Kea go up and down completely randomly.
Pair Corralation between X Fab and Mauna Kea
Assuming the 90 days trading horizon X Fab Silicon is expected to generate 0.62 times more return on investment than Mauna Kea. However, X Fab Silicon is 1.62 times less risky than Mauna Kea. It trades about -0.03 of its potential returns per unit of risk. Mauna Kea Technologies is currently generating about -0.03 per unit of risk. If you would invest 663.00 in X Fab Silicon on August 30, 2024 and sell it today you would lose (239.00) from holding X Fab Silicon or give up 36.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Fab Silicon vs. Mauna Kea Technologies
Performance |
| Timeline |
| X Fab Silicon |
| Mauna Kea Technologies |
X Fab and Mauna Kea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Fab and Mauna Kea
The main advantage of trading using opposite X Fab and Mauna Kea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Fab position performs unexpectedly, Mauna Kea 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 Mauna Kea will offset losses from the drop in Mauna Kea's long position.The idea behind X Fab Silicon and Mauna Kea Technologies 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.| Mauna Kea vs. LVMH Mot Hennessy | Mauna Kea vs. LOreal SA | Mauna Kea vs. Hermes International SCA | Mauna Kea vs. Manitou BF SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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