Correlation Between X FAB and PLAYTIKA HOLDING

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Can any of the company-specific risk be diversified away by investing in both X FAB and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01, you can compare the effects of market volatilities on X FAB and PLAYTIKA HOLDING 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 PLAYTIKA HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and PLAYTIKA HOLDING.

Diversification Opportunities for X FAB and PLAYTIKA HOLDING

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between XFB and PLAYTIKA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and PLAYTIKA HOLDING DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTIKA HOLDING 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 PLAYTIKA HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTIKA HOLDING has no effect on the direction of X FAB i.e., X FAB and PLAYTIKA HOLDING go up and down completely randomly.

Pair Corralation between X FAB and PLAYTIKA HOLDING

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.32 times more return on investment than PLAYTIKA HOLDING. However, X FAB is 1.32 times more volatile than PLAYTIKA HOLDING DL 01. It trades about 0.15 of its potential returns per unit of risk. PLAYTIKA HOLDING DL 01 is currently generating about -0.42 per unit of risk. If you would invest  435.00  in X FAB Silicon Foundries on September 24, 2024 and sell it today you would earn a total of  41.00  from holding X FAB Silicon Foundries or generate 9.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

X FAB Silicon Foundries  vs.  PLAYTIKA HOLDING DL 01

 Performance 
       Timeline  
X FAB Silicon 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, X FAB is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
PLAYTIKA HOLDING 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PLAYTIKA HOLDING DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAYTIKA HOLDING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

X FAB and PLAYTIKA HOLDING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with X FAB and PLAYTIKA HOLDING

The main advantage of trading using opposite X FAB and PLAYTIKA HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, PLAYTIKA HOLDING 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 PLAYTIKA HOLDING will offset losses from the drop in PLAYTIKA HOLDING's long position.
The idea behind X FAB Silicon Foundries and PLAYTIKA HOLDING DL 01 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.
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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