Correlation Between X FAB and ZINC MEDIA
Can any of the company-specific risk be diversified away by investing in both X FAB and ZINC MEDIA 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 ZINC MEDIA 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 ZINC MEDIA GR, you can compare the effects of market volatilities on X FAB and ZINC MEDIA 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 ZINC MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and ZINC MEDIA.
Diversification Opportunities for X FAB and ZINC MEDIA
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between XFB and ZINC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and ZINC MEDIA GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINC MEDIA GR 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 ZINC MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINC MEDIA GR has no effect on the direction of X FAB i.e., X FAB and ZINC MEDIA go up and down completely randomly.
Pair Corralation between X FAB and ZINC MEDIA
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the ZINC MEDIA. In addition to that, X FAB is 1.34 times more volatile than ZINC MEDIA GR. It trades about -0.09 of its total potential returns per unit of risk. ZINC MEDIA GR is currently generating about -0.06 per unit of volatility. If you would invest 104.00 in ZINC MEDIA GR on August 25, 2024 and sell it today you would lose (36.00) from holding ZINC MEDIA GR or give up 34.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. ZINC MEDIA GR
Performance |
| Timeline |
| X FAB Silicon |
| ZINC MEDIA GR |
X FAB and ZINC MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and ZINC MEDIA
The main advantage of trading using opposite X FAB and ZINC MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, ZINC MEDIA 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 ZINC MEDIA will offset losses from the drop in ZINC MEDIA's long position.| X FAB vs. Boiron SA | X FAB vs. ON SEMICONDUCTOR | X FAB vs. Tianjin Capital Environmental | X FAB vs. Insteel Industries |
| ZINC MEDIA vs. X FAB Silicon Foundries | ZINC MEDIA vs. Micron Technology | ZINC MEDIA vs. Microchip Technology Incorporated | ZINC MEDIA vs. Evolution Mining Limited |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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