Correlation Between X FAB and KENNAMETAL INC
Can any of the company-specific risk be diversified away by investing in both X FAB and KENNAMETAL INC 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 KENNAMETAL INC 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 KENNAMETAL INC, you can compare the effects of market volatilities on X FAB and KENNAMETAL INC 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 KENNAMETAL INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and KENNAMETAL INC.
Diversification Opportunities for X FAB and KENNAMETAL INC
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between XFB and KENNAMETAL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and KENNAMETAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENNAMETAL INC 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 KENNAMETAL INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENNAMETAL INC has no effect on the direction of X FAB i.e., X FAB and KENNAMETAL INC go up and down completely randomly.
Pair Corralation between X FAB and KENNAMETAL INC
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 2.46 times more return on investment than KENNAMETAL INC. However, X FAB is 2.46 times more volatile than KENNAMETAL INC. It trades about 0.16 of its potential returns per unit of risk. KENNAMETAL INC is currently generating about -0.35 per unit of risk. If you would invest 424.00 in X FAB Silicon Foundries on October 28, 2024 and sell it today you would earn a total of 79.00 from holding X FAB Silicon Foundries or generate 18.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. KENNAMETAL INC
Performance |
| Timeline |
| X FAB Silicon |
| KENNAMETAL INC |
X FAB and KENNAMETAL INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and KENNAMETAL INC
The main advantage of trading using opposite X FAB and KENNAMETAL INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, KENNAMETAL INC 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 KENNAMETAL INC will offset losses from the drop in KENNAMETAL INC's long position.| X FAB vs. ELMOS SEMICONDUCTOR | X FAB vs. LG Display Co | X FAB vs. PLAYWAY SA ZY 10 | X FAB vs. MagnaChip Semiconductor Corp |
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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 Stocks Directory module to find actively traded stocks across global markets.
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