Correlation Between X-FAB Silicon and Deutsche Telekom
Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and Deutsche Telekom 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 Deutsche Telekom 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 Deutsche Telekom AG, you can compare the effects of market volatilities on X-FAB Silicon and Deutsche Telekom 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 Deutsche Telekom. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and Deutsche Telekom.
Diversification Opportunities for X-FAB Silicon and Deutsche Telekom
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between X-FAB and Deutsche is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Deutsche Telekom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Telekom 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 Deutsche Telekom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Telekom has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Deutsche Telekom go up and down completely randomly.
Pair Corralation between X-FAB Silicon and Deutsche Telekom
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 2.92 times more return on investment than Deutsche Telekom. However, X-FAB Silicon is 2.92 times more volatile than Deutsche Telekom AG. It trades about 0.01 of its potential returns per unit of risk. Deutsche Telekom AG is currently generating about -0.21 per unit of risk. If you would invest 501.00 in X FAB Silicon Foundries on October 10, 2024 and sell it today you would lose (1.00) from holding X FAB Silicon Foundries or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Deutsche Telekom AG
Performance |
| Timeline |
| X FAB Silicon |
| Deutsche Telekom |
X-FAB Silicon and Deutsche Telekom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X-FAB Silicon and Deutsche Telekom
The main advantage of trading using opposite X-FAB Silicon and Deutsche Telekom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, Deutsche Telekom 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 Deutsche Telekom will offset losses from the drop in Deutsche Telekom'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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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