Correlation Between X FAB and Kronos Worldwide
Can any of the company-specific risk be diversified away by investing in both X FAB and Kronos Worldwide 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 Kronos Worldwide 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 Kronos Worldwide, you can compare the effects of market volatilities on X FAB and Kronos Worldwide 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 Kronos Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Kronos Worldwide.
Diversification Opportunities for X FAB and Kronos Worldwide
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between XFB and Kronos is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Kronos Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kronos Worldwide 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 Kronos Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kronos Worldwide has no effect on the direction of X FAB i.e., X FAB and Kronos Worldwide go up and down completely randomly.
Pair Corralation between X FAB and Kronos Worldwide
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Kronos Worldwide. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.03 times less risky than Kronos Worldwide. The stock trades about -0.09 of its potential returns per unit of risk. The Kronos Worldwide is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 839.00 in Kronos Worldwide on September 14, 2024 and sell it today you would earn a total of 163.00 from holding Kronos Worldwide or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Kronos Worldwide
Performance |
| Timeline |
| X FAB Silicon |
| Kronos Worldwide |
X FAB and Kronos Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Kronos Worldwide
The main advantage of trading using opposite X FAB and Kronos Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Kronos Worldwide 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 Kronos Worldwide will offset losses from the drop in Kronos Worldwide's long position.The idea behind X FAB Silicon Foundries and Kronos Worldwide 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.| Kronos Worldwide vs. Gamma Communications plc | Kronos Worldwide vs. Transportadora de Gas | Kronos Worldwide vs. Iridium Communications | Kronos Worldwide vs. HEMISPHERE EGY |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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