Correlation Between X-FAB Silicon and TRI CHEMICAL

Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and TRI CHEMICAL 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 TRI CHEMICAL 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 TRI CHEMICAL LABORATINC, you can compare the effects of market volatilities on X-FAB Silicon and TRI CHEMICAL 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 TRI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and TRI CHEMICAL.

Diversification Opportunities for X-FAB Silicon and TRI CHEMICAL

-0.77

Correlation Coefficient

X-FAB Silicon  TRI CHEMICAL

Pay attention - limited upside

The 3 months correlation between X-FAB and TRI is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and TRI CHEMICAL LABORATINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRI CHEMICAL LABORATINC 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 TRI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRI CHEMICAL LABORATINC has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and TRI CHEMICAL go up and down completely randomly.

Pair Corralation between X-FAB Silicon and TRI CHEMICAL

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 0.51 times more return on investment than TRI CHEMICAL. However, X FAB Silicon Foundries is 1.97 times less risky than TRI CHEMICAL. It trades about -0.21 of its potential returns per unit of risk. TRI CHEMICAL LABORATINC is currently generating about -0.4 per unit of risk. If you would invest  708.00  in X FAB Silicon Foundries on January 24, 2024 and sell it today you would lose (45.00) from holding X FAB Silicon Foundries or give up 6.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

X FAB Silicon Foundries  vs.  TRI CHEMICAL LABORATINC

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TRI CHEMICAL LABORATINC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TRI CHEMICAL LABORATINC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, TRI CHEMICAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with X-FAB Silicon and TRI CHEMICAL

The main advantage of trading using opposite X-FAB Silicon and TRI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, TRI CHEMICAL 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 TRI CHEMICAL will offset losses from the drop in TRI CHEMICAL's long position.

The idea behind X FAB Silicon Foundries and TRI CHEMICAL LABORATINC 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.

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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.