Correlation Between X FAB and BW Offshore
Can any of the company-specific risk be diversified away by investing in both X FAB and BW Offshore 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 BW Offshore 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 BW Offshore Limited, you can compare the effects of market volatilities on X FAB and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and BW Offshore.
Diversification Opportunities for X FAB and BW Offshore
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between XFABF and BWOFY is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited 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 Foundries are associated (or correlated) with BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of X FAB i.e., X FAB and BW Offshore go up and down completely randomly.
Pair Corralation between X FAB and BW Offshore
Assuming the 90 days horizon X FAB Silicon Foundries is expected to under-perform the BW Offshore. But the pink sheet apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.14 times less risky than BW Offshore. The pink sheet trades about -0.15 of its potential returns per unit of risk. The BW Offshore Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 461.00 in BW Offshore Limited on August 31, 2024 and sell it today you would earn a total of 94.00 from holding BW Offshore Limited or generate 20.39% 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. BW Offshore Limited
Performance |
| Timeline |
| X FAB Silicon |
| BW Offshore Limited |
X FAB and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and BW Offshore
The main advantage of trading using opposite X FAB and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| X FAB vs. NVIDIA | X FAB vs. Intel | X FAB vs. Taiwan Semiconductor Manufacturing | X FAB vs. Marvell Technology Group |
| BW Offshore vs. Citizens | BW Offshore vs. Smith Douglas Homes | BW Offshore vs. Old Republic International | BW Offshore vs. Hudson Pacific Properties |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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