Correlation Between X Fab and High Co
Can any of the company-specific risk be diversified away by investing in both X Fab and High Co 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 High Co 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 High Co SA, you can compare the effects of market volatilities on X Fab and High Co 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 High Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and High Co.
Diversification Opportunities for X Fab and High Co
Good diversification
The 3 months correlation between XFAB and High is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and High Co SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Co SA 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 High Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Co SA has no effect on the direction of X Fab i.e., X Fab and High Co go up and down completely randomly.
Pair Corralation between X Fab and High Co
Assuming the 90 days trading horizon X Fab is expected to generate 35.86 times less return on investment than High Co. In addition to that, X Fab is 2.56 times more volatile than High Co SA. It trades about 0.0 of its total potential returns per unit of risk. High Co SA is currently generating about 0.27 per unit of volatility. If you would invest 254.00 in High Co SA on November 28, 2024 and sell it today you would earn a total of 16.00 from holding High Co SA or generate 6.3% 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. High Co SA
Performance |
| Timeline |
| X Fab Silicon |
| High Co SA |
X Fab and High Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Fab and High Co
The main advantage of trading using opposite X Fab and High Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Fab position performs unexpectedly, High Co 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 High Co will offset losses from the drop in High Co's long position.The idea behind X Fab Silicon and High Co SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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