Correlation Between X-FAB Silicon and Albemarle
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Albemarle 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 Silicon and Albemarle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Albemarle, you can compare the effects of market volatilities on X-FAB Silicon and Albemarle 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 Silicon with a short position of Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Albemarle.
Diversification Opportunities for X-FAB Silicon and Albemarle
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between X-FAB and Albemarle is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle and X-FAB Silicon 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 Foundries are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Albemarle go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Albemarle
Assuming the 90 days horizon X-FAB Silicon is expected to generate 4.94 times less return on investment than Albemarle. In addition to that, X-FAB Silicon is 1.6 times more volatile than Albemarle. It trades about 0.02 of its total potential returns per unit of risk. Albemarle is currently generating about 0.17 per unit of volatility. If you would invest 4,194 in Albemarle on October 24, 2024 and sell it today you would earn a total of 255.00 from holding Albemarle or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Albemarle
Performance |
| Timeline |
| X FAB Silicon |
| Albemarle |
X-FAB Silicon and Albemarle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Albemarle
The main advantage of trading using opposite X-FAB Silicon and Albemarle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Albemarle 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 Albemarle will offset losses from the drop in Albemarle's long position.| X-FAB Silicon vs. NVIDIA | X-FAB Silicon vs. Intel | X-FAB Silicon vs. Taiwan Semiconductor Manufacturing | X-FAB Silicon vs. Marvell Technology Group |
| Albemarle vs. Elite Education Group | Albemarle vs. Denison Mines Corp | Albemarle vs. NioCorp Developments Ltd | Albemarle vs. Zane Interactive Publishing |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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