Correlation Between X FAB and AIR PRODCHEMICALS
Can any of the company-specific risk be diversified away by investing in both X FAB and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS, you can compare the effects of market volatilities on X FAB and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and AIR PRODCHEMICALS.
Diversification Opportunities for X FAB and AIR PRODCHEMICALS
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and AIR is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of X FAB i.e., X FAB and AIR PRODCHEMICALS go up and down completely randomly.
Pair Corralation between X FAB and AIR PRODCHEMICALS
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the AIR PRODCHEMICALS. In addition to that, X FAB is 1.5 times more volatile than AIR PRODCHEMICALS. It trades about -0.03 of its total potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.02 per unit of volatility. If you would invest 27,844 in AIR PRODCHEMICALS on October 23, 2024 and sell it today you would earn a total of 2,906 from holding AIR PRODCHEMICALS or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. AIR PRODCHEMICALS
Performance |
| Timeline |
| X FAB Silicon |
| AIR PRODCHEMICALS |
X FAB and AIR PRODCHEMICALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and AIR PRODCHEMICALS
The main advantage of trading using opposite X FAB and AIR PRODCHEMICALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, AIR PRODCHEMICALS 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 AIR PRODCHEMICALS will offset losses from the drop in AIR PRODCHEMICALS's long position.| X FAB vs. Games Workshop Group | X FAB vs. MOVIE GAMES SA | X FAB vs. Hochschild Mining plc | X FAB vs. PACIFIC ONLINE |
| AIR PRODCHEMICALS vs. LANDSEA GREEN MANAGEMENT | AIR PRODCHEMICALS vs. AGF Management Limited | AIR PRODCHEMICALS vs. PURETECH HEALTH PLC | AIR PRODCHEMICALS vs. Universal Health Realty |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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