Correlation Between TOMBADOR IRON and X-FAB Silicon

Can any of the company-specific risk be diversified away by investing in both TOMBADOR IRON and X-FAB Silicon 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 TOMBADOR IRON and X-FAB Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOMBADOR IRON LTD and X FAB Silicon Foundries, you can compare the effects of market volatilities on TOMBADOR IRON and X-FAB Silicon 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 TOMBADOR IRON with a short position of X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOMBADOR IRON and X-FAB Silicon.

Diversification Opportunities for TOMBADOR IRON and X-FAB Silicon

0.0

Correlation Coefficient

TOMBADOR IRON  X-FAB Silicon

Pay attention - limited upside

The 3 months correlation between TOMBADOR and X-FAB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TOMBADOR IRON LTD 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 TOMBADOR IRON 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 TOMBADOR IRON LTD are associated (or correlated) with X-FAB Silicon. 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 TOMBADOR IRON i.e., TOMBADOR IRON and X-FAB Silicon go up and down completely randomly.

Pair Corralation between TOMBADOR IRON and X-FAB Silicon

Assuming the 90 days horizon TOMBADOR IRON LTD is expected to generate 18.14 times more return on investment than X-FAB Silicon. However, TOMBADOR IRON is 18.14 times more volatile than X FAB Silicon Foundries. It trades about 0.04 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  0.90  in TOMBADOR IRON LTD on October 11, 2024 and sell it today you would earn a total of  9.10  from holding TOMBADOR IRON LTD or generate 1011.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

TOMBADOR IRON LTD  vs.  X FAB Silicon Foundries

TOMBADOR IRON LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOMBADOR IRON LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TOMBADOR IRON is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 comparatively stable basic indicators, X-FAB Silicon is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TOMBADOR IRON and X-FAB Silicon

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

The idea behind TOMBADOR IRON LTD and X FAB Silicon Foundries 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.