Correlation Between X-FAB Silicon and IND+COMMBK CHINA
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and IND+COMMBK 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 Silicon and IND+COMMBK 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 INDCOMMBK CHINA ADR20, you can compare the effects of market volatilities on X-FAB Silicon and IND+COMMBK 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 Silicon with a short position of IND+COMMBK CHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and IND+COMMBK CHINA.
Diversification Opportunities for X-FAB Silicon and IND+COMMBK CHINA
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between X-FAB and IND+COMMBK is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and INDCOMMBK CHINA ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDCOMMBK CHINA ADR20 and X-FAB Silicon 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 IND+COMMBK CHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDCOMMBK CHINA ADR20 has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and IND+COMMBK CHINA go up and down completely randomly.
Pair Corralation between X-FAB Silicon and IND+COMMBK CHINA
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the IND+COMMBK CHINA. In addition to that, X-FAB Silicon is 1.04 times more volatile than INDCOMMBK CHINA ADR20. It trades about -0.06 of its total potential returns per unit of risk. INDCOMMBK CHINA ADR20 is currently generating about 0.04 per unit of volatility. If you would invest 819.00 in INDCOMMBK CHINA ADR20 on August 31, 2024 and sell it today you would earn a total of 261.00 from holding INDCOMMBK CHINA ADR20 or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. INDCOMMBK CHINA ADR20
Performance |
| Timeline |
| X FAB Silicon |
| INDCOMMBK CHINA ADR20 |
X-FAB Silicon and IND+COMMBK CHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and IND+COMMBK CHINA
The main advantage of trading using opposite X-FAB Silicon and IND+COMMBK CHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, IND+COMMBK 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 IND+COMMBK CHINA will offset losses from the drop in IND+COMMBK CHINA's long position.| X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc |
| IND+COMMBK CHINA vs. Aedas Homes SA | IND+COMMBK CHINA vs. Check Point Software | IND+COMMBK CHINA vs. X FAB Silicon Foundries | IND+COMMBK CHINA vs. SWISS WATER DECAFFCOFFEE |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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