Correlation Between X FAB and Sankyo
Can any of the company-specific risk be diversified away by investing in both X FAB and Sankyo 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 Sankyo 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 Sankyo Co, you can compare the effects of market volatilities on X FAB and Sankyo 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 Sankyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Sankyo.
Diversification Opportunities for X FAB and Sankyo
Weak diversification
The 3 months correlation between XFB and Sankyo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Sankyo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sankyo 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 Sankyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sankyo has no effect on the direction of X FAB i.e., X FAB and Sankyo go up and down completely randomly.
Pair Corralation between X FAB and Sankyo
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.86 times more return on investment than Sankyo. However, X FAB is 1.86 times more volatile than Sankyo Co. It trades about 0.21 of its potential returns per unit of risk. Sankyo Co is currently generating about 0.01 per unit of risk. If you would invest 439.00 in X FAB Silicon Foundries on September 15, 2024 and sell it today you would earn a total of 58.00 from holding X FAB Silicon Foundries or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Sankyo Co
Performance |
| Timeline |
| X FAB Silicon |
| Sankyo |
X FAB and Sankyo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Sankyo
The main advantage of trading using opposite X FAB and Sankyo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Sankyo 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 Sankyo will offset losses from the drop in Sankyo's long position.The idea behind X FAB Silicon Foundries and Sankyo Co 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.| Sankyo vs. Entravision Communications | Sankyo vs. T MOBILE US | Sankyo vs. DXC Technology Co | Sankyo vs. Charter Communications |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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