Correlation Between X FAB and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both X FAB and Sunny Optical 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 Sunny Optical 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 Sunny Optical Technology, you can compare the effects of market volatilities on X FAB and Sunny Optical 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 Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Sunny Optical.
Diversification Opportunities for X FAB and Sunny Optical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Sunny is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of X FAB i.e., X FAB and Sunny Optical go up and down completely randomly.
Pair Corralation between X FAB and Sunny Optical
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Sunny Optical. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.36 times less risky than Sunny Optical. The stock trades about -0.21 of its potential returns per unit of risk. The Sunny Optical Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 554.00 in Sunny Optical Technology on August 25, 2024 and sell it today you would earn a total of 131.00 from holding Sunny Optical Technology or generate 23.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Sunny Optical Technology
Performance |
| Timeline |
| X FAB Silicon |
| Sunny Optical Technology |
X FAB and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Sunny Optical
The main advantage of trading using opposite X FAB and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| X FAB vs. Boiron SA | X FAB vs. ON SEMICONDUCTOR | X FAB vs. Tianjin Capital Environmental | X FAB vs. Insteel Industries |
| Sunny Optical vs. GOODYEAR T RUBBER | Sunny Optical vs. MACOM Technology Solutions | Sunny Optical vs. Martin Marietta Materials | Sunny Optical vs. Firan Technology Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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