Correlation Between X Fab and DATANG INTL
Can any of the company-specific risk be diversified away by investing in both X Fab and DATANG INTL 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 DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Fab Silicon and DATANG INTL POW, you can compare the effects of market volatilities on X Fab and DATANG INTL 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 DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and DATANG INTL.
Diversification Opportunities for X Fab and DATANG INTL
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between XFB and DATANG is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW 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 are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of X Fab i.e., X Fab and DATANG INTL go up and down completely randomly.
Pair Corralation between X Fab and DATANG INTL
Assuming the 90 days horizon X Fab Silicon is expected to generate 0.88 times more return on investment than DATANG INTL. However, X Fab Silicon is 1.13 times less risky than DATANG INTL. It trades about 0.05 of its potential returns per unit of risk. DATANG INTL POW is currently generating about -0.08 per unit of risk. If you would invest 412.00 in X Fab Silicon on September 1, 2024 and sell it today you would earn a total of 8.00 from holding X Fab Silicon or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Fab Silicon vs. DATANG INTL POW
Performance |
| Timeline |
| X Fab Silicon |
| DATANG INTL POW |
X Fab and DATANG INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Fab and DATANG INTL
The main advantage of trading using opposite X Fab and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Fab position performs unexpectedly, DATANG INTL 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 DATANG INTL will offset losses from the drop in DATANG INTL's long position.The idea behind X Fab Silicon and DATANG INTL POW 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.| DATANG INTL vs. SIVERS SEMICONDUCTORS AB | DATANG INTL vs. Darden Restaurants | DATANG INTL vs. Reliance Steel Aluminum | DATANG INTL vs. Q2M Managementberatung AG |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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