Correlation Between X-FAB Silicon and Balchem
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Balchem 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 Balchem 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 Balchem, you can compare the effects of market volatilities on X-FAB Silicon and Balchem 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 Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Balchem.
Diversification Opportunities for X-FAB Silicon and Balchem
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between X-FAB and Balchem is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem 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 Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Balchem go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Balchem
Assuming the 90 days horizon X FAB Silicon Foundries is expected to generate 2.39 times more return on investment than Balchem. However, X-FAB Silicon is 2.39 times more volatile than Balchem. It trades about 0.0 of its potential returns per unit of risk. Balchem is currently generating about -0.05 per unit of risk. If you would invest 558.00 in X FAB Silicon Foundries on October 25, 2024 and sell it today you would lose (20.00) from holding X FAB Silicon Foundries or give up 3.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Balchem
Performance |
| Timeline |
| X FAB Silicon |
| Balchem |
X-FAB Silicon and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Balchem
The main advantage of trading using opposite X-FAB Silicon and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem'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 |
| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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