Correlation Between X FAB and OBSERVE MEDICAL
Can any of the company-specific risk be diversified away by investing in both X FAB and OBSERVE MEDICAL 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 OBSERVE MEDICAL 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 OBSERVE MEDICAL ASA, you can compare the effects of market volatilities on X FAB and OBSERVE MEDICAL 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 OBSERVE MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and OBSERVE MEDICAL.
Diversification Opportunities for X FAB and OBSERVE MEDICAL
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XFB and OBSERVE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and OBSERVE MEDICAL ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBSERVE MEDICAL ASA 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 OBSERVE MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBSERVE MEDICAL ASA has no effect on the direction of X FAB i.e., X FAB and OBSERVE MEDICAL go up and down completely randomly.
Pair Corralation between X FAB and OBSERVE MEDICAL
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the OBSERVE MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 14.06 times less risky than OBSERVE MEDICAL. The stock trades about -0.02 of its potential returns per unit of risk. The OBSERVE MEDICAL ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 19.00 in OBSERVE MEDICAL ASA on October 16, 2024 and sell it today you would lose (16.22) from holding OBSERVE MEDICAL ASA or give up 85.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. OBSERVE MEDICAL ASA
Performance |
| Timeline |
| X FAB Silicon |
| OBSERVE MEDICAL ASA |
X FAB and OBSERVE MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and OBSERVE MEDICAL
The main advantage of trading using opposite X FAB and OBSERVE MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, OBSERVE MEDICAL 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 OBSERVE MEDICAL will offset losses from the drop in OBSERVE MEDICAL's long position.| X FAB vs. CHRYSALIS INVESTMENTS LTD | X FAB vs. JLF INVESTMENT | X FAB vs. Playa Hotels Resorts | X FAB vs. Hyatt Hotels |
| OBSERVE MEDICAL vs. THRACE PLASTICS | OBSERVE MEDICAL vs. The Yokohama Rubber | OBSERVE MEDICAL vs. X FAB Silicon Foundries | OBSERVE MEDICAL vs. Silicon Motion Technology |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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