Correlation Between X FAB and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both X FAB and FAST RETAIL 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 FAST RETAIL 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 FAST RETAIL ADR, you can compare the effects of market volatilities on X FAB and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and FAST RETAIL.
Diversification Opportunities for X FAB and FAST RETAIL
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and FAST is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of X FAB i.e., X FAB and FAST RETAIL go up and down completely randomly.
Pair Corralation between X FAB and FAST RETAIL
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.57 times more return on investment than FAST RETAIL. However, X FAB is 1.57 times more volatile than FAST RETAIL ADR. It trades about 0.06 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about -0.21 per unit of risk. If you would invest 501.00 in X FAB Silicon Foundries on October 12, 2024 and sell it today you would earn a total of 11.00 from holding X FAB Silicon Foundries or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. FAST RETAIL ADR
Performance |
| Timeline |
| X FAB Silicon |
| FAST RETAIL ADR |
X FAB and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and FAST RETAIL
The main advantage of trading using opposite X FAB and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| X FAB vs. Zijin Mining Group | X FAB vs. Forsys Metals Corp | X FAB vs. ScanSource | X FAB vs. Perseus Mining Limited |
| FAST RETAIL vs. Sekisui Chemical Co | FAST RETAIL vs. X FAB Silicon Foundries | FAST RETAIL vs. TRI CHEMICAL LABORATINC | FAST RETAIL vs. Pentair plc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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