Correlation Between X-FAB Silicon and Hudson Technologies
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Hudson 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 Silicon and Hudson 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 Foundries and Hudson Technologies, you can compare the effects of market volatilities on X-FAB Silicon and Hudson 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 Silicon with a short position of Hudson Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Hudson Technologies.
Diversification Opportunities for X-FAB Silicon and Hudson Technologies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between X-FAB and Hudson is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies 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 Hudson Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Technologies has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Hudson Technologies go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Hudson Technologies
Assuming the 90 days horizon X FAB Silicon Foundries is expected to generate 0.6 times more return on investment than Hudson Technologies. However, X FAB Silicon Foundries is 1.68 times less risky than Hudson Technologies. It trades about -0.29 of its potential returns per unit of risk. Hudson Technologies is currently generating about -0.26 per unit of risk. If you would invest 558.00 in X FAB Silicon Foundries on August 29, 2024 and sell it today you would lose (109.00) from holding X FAB Silicon Foundries or give up 19.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Hudson Technologies
Performance |
| Timeline |
| X FAB Silicon |
| Hudson Technologies |
X-FAB Silicon and Hudson Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Hudson Technologies
The main advantage of trading using opposite X-FAB Silicon and Hudson Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Hudson 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 Hudson Technologies will offset losses from the drop in Hudson Technologies' 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 |
| Hudson Technologies vs. Sensient Technologies | Hudson Technologies vs. Quaker Chemical | Hudson Technologies vs. Minerals Technologies | Hudson Technologies vs. Hawkins |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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