Correlation Between X Fab and Union Technologies
Can any of the company-specific risk be diversified away by investing in both X Fab and Union Technologies 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 Union Technologies 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 Union Technologies Informatique, you can compare the effects of market volatilities on X Fab and Union Technologies 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 Union Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and Union Technologies.
Diversification Opportunities for X Fab and Union Technologies
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFAB and Union is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and Union Technologies Informatiqu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union 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 Union Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Technologies has no effect on the direction of X Fab i.e., X Fab and Union Technologies go up and down completely randomly.
Pair Corralation between X Fab and Union Technologies
Assuming the 90 days trading horizon X Fab Silicon is expected to generate 0.94 times more return on investment than Union Technologies. However, X Fab Silicon is 1.06 times less risky than Union Technologies. It trades about 0.21 of its potential returns per unit of risk. Union Technologies Informatique is currently generating about -0.05 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Fab Silicon vs. Union Technologies Informatiqu
Performance |
| Timeline |
| X Fab Silicon |
| Union Technologies |
X Fab and Union Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Fab and Union Technologies
The main advantage of trading using opposite X Fab and Union Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Fab position performs unexpectedly, Union Technologies 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 Union Technologies will offset losses from the drop in Union Technologies' long position.The idea behind X Fab Silicon and Union Technologies Informatique 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.| Union Technologies vs. Linedata Services SA | Union Technologies vs. Lectra SA | Union Technologies vs. Manitou BF SA | Union Technologies vs. Ossiam Minimum Variance |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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