Correlation Between X FAB and China Resources
Can any of the company-specific risk be diversified away by investing in both X FAB and China Resources 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 China Resources 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 China Resources Land, you can compare the effects of market volatilities on X FAB and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and China Resources.
Diversification Opportunities for X FAB and China Resources
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and China is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of X FAB i.e., X FAB and China Resources go up and down completely randomly.
Pair Corralation between X FAB and China Resources
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the China Resources. In addition to that, X FAB is 1.6 times more volatile than China Resources Land. It trades about -0.06 of its total potential returns per unit of risk. China Resources Land is currently generating about 0.11 per unit of volatility. If you would invest 274.00 in China Resources Land on October 31, 2024 and sell it today you would earn a total of 10.00 from holding China Resources Land or generate 3.65% 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. China Resources Land
Performance |
| Timeline |
| X FAB Silicon |
| China Resources Land |
X FAB and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and China Resources
The main advantage of trading using opposite X FAB and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| X FAB vs. Carsales | X FAB vs. The Hanover Insurance | X FAB vs. Safety Insurance Group | X FAB vs. PACIFIC ONLINE |
| China Resources vs. CTP NV EO | China Resources vs. Superior Plus Corp | China Resources vs. Origin Agritech | China Resources vs. Identiv |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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