Correlation Between X-FAB Silicon and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Ashtead Group 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 Silicon and Ashtead Group 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 Ashtead Group plc, you can compare the effects of market volatilities on X-FAB Silicon and Ashtead Group 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 Silicon with a short position of Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Ashtead Group.
Diversification Opportunities for X-FAB Silicon and Ashtead Group
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between X-FAB and Ashtead is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc and X-FAB Silicon 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Ashtead Group go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Ashtead Group
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Ashtead Group. In addition to that, X-FAB Silicon is 1.22 times more volatile than Ashtead Group plc. It trades about -0.11 of its total potential returns per unit of risk. Ashtead Group plc is currently generating about 0.06 per unit of volatility. If you would invest 5,697 in Ashtead Group plc on September 5, 2024 and sell it today you would earn a total of 1,803 from holding Ashtead Group plc or generate 31.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Ashtead Group plc
Performance |
| Timeline |
| X FAB Silicon |
| Ashtead Group plc |
X-FAB Silicon and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Ashtead Group
The main advantage of trading using opposite X-FAB Silicon and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc | X-FAB Silicon vs. Apple Inc |
| Ashtead Group vs. PARKEN Sport Entertainment | Ashtead Group vs. Tencent Music Entertainment | Ashtead Group vs. GEELY AUTOMOBILE | Ashtead Group vs. RCS MediaGroup SpA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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