Correlation Between X FAB and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both X FAB and Highlight Communications 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 Highlight Communications 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 Highlight Communications AG, you can compare the effects of market volatilities on X FAB and Highlight Communications 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 Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Highlight Communications.
Diversification Opportunities for X FAB and Highlight Communications
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between XFB and Highlight is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications 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 Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of X FAB i.e., X FAB and Highlight Communications go up and down completely randomly.
Pair Corralation between X FAB and Highlight Communications
Assuming the 90 days trading horizon X FAB is expected to generate 1.51 times less return on investment than Highlight Communications. In addition to that, X FAB is 1.2 times more volatile than Highlight Communications AG. It trades about 0.19 of its total potential returns per unit of risk. Highlight Communications AG is currently generating about 0.34 per unit of volatility. If you would invest 98.00 in Highlight Communications AG on September 13, 2024 and sell it today you would earn a total of 17.00 from holding Highlight Communications AG or generate 17.35% 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. Highlight Communications AG
Performance |
| Timeline |
| X FAB Silicon |
| Highlight Communications |
X FAB and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Highlight Communications
The main advantage of trading using opposite X FAB and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| X FAB vs. Highlight Communications AG | X FAB vs. Transportadora de Gas | X FAB vs. Global Ship Lease | X FAB vs. USWE SPORTS AB |
| Highlight Communications vs. Solstad Offshore ASA | Highlight Communications vs. SBM OFFSHORE | Highlight Communications vs. Ares Management Corp | Highlight Communications vs. TOREX SEMICONDUCTOR LTD |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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