Correlation Between X FAB and Chuangs China
Can any of the company-specific risk be diversified away by investing in both X FAB and Chuangs China 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 Chuangs China 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 Chuangs China Investments, you can compare the effects of market volatilities on X FAB and Chuangs China 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 Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Chuangs China.
Diversification Opportunities for X FAB and Chuangs China
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between XFB and Chuangs is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments 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 Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of X FAB i.e., X FAB and Chuangs China go up and down completely randomly.
Pair Corralation between X FAB and Chuangs China
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Chuangs China. In addition to that, X FAB is 4.86 times more volatile than Chuangs China Investments. It trades about -0.04 of its total potential returns per unit of risk. Chuangs China Investments is currently generating about 0.0 per unit of volatility. If you would invest 1.00 in Chuangs China Investments on September 26, 2024 and sell it today you would earn a total of 0.00 from holding Chuangs China Investments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Chuangs China Investments
Performance |
| Timeline |
| X FAB Silicon |
| Chuangs China Investments |
X FAB and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Chuangs China
The main advantage of trading using opposite X FAB and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.The idea behind X FAB Silicon Foundries and Chuangs China Investments 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.| Chuangs China vs. Sun Hung Kai | Chuangs China vs. China Overseas Land | Chuangs China vs. Mitsubishi Estate Co | Chuangs China vs. Daiwa House Industry |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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