Correlation Between Sanyo Chemical and X FAB
Can any of the company-specific risk be diversified away by investing in both Sanyo Chemical and X FAB 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 Sanyo Chemical and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanyo Chemical Industries and X FAB Silicon Foundries, you can compare the effects of market volatilities on Sanyo Chemical and X FAB 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 Sanyo Chemical with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanyo Chemical and X FAB.
Diversification Opportunities for Sanyo Chemical and X FAB
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanyo and XFB is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sanyo Chemical Industries and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and Sanyo Chemical 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 Sanyo Chemical Industries are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Sanyo Chemical i.e., Sanyo Chemical and X FAB go up and down completely randomly.
Pair Corralation between Sanyo Chemical and X FAB
Assuming the 90 days horizon Sanyo Chemical Industries is expected to generate 0.54 times more return on investment than X FAB. However, Sanyo Chemical Industries is 1.85 times less risky than X FAB. It trades about -0.01 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of risk. If you would invest 2,760 in Sanyo Chemical Industries on September 3, 2024 and sell it today you would lose (320.00) from holding Sanyo Chemical Industries or give up 11.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanyo Chemical Industries vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Sanyo Chemical Industries |
| X FAB Silicon |
Sanyo Chemical and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanyo Chemical and X FAB
The main advantage of trading using opposite Sanyo Chemical and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanyo Chemical position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Sanyo Chemical vs. X FAB Silicon Foundries | Sanyo Chemical vs. Quaker Chemical | Sanyo Chemical vs. Mitsubishi Gas Chemical | Sanyo Chemical vs. Shin Etsu Chemical Co |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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