Correlation Between WIMFARM SA and X FAB

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

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

Diversification Opportunities for WIMFARM SA and X FAB

0.56

Correlation Coefficient

WIMFARM SA  X FAB

Very weak diversification

The 3 months correlation between WIMFARM and XFB is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO 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 WIMFARM SA 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 WIMFARM SA EO 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 WIMFARM SA i.e., WIMFARM SA and X FAB go up and down completely randomly.

Pair Corralation between WIMFARM SA and X FAB

Assuming the 90 days horizon WIMFARM SA EO is expected to under-perform the X FAB. In addition to that, WIMFARM SA is 1.47 times more volatile than X FAB Silicon Foundries. It trades about -0.06 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.02 per unit of volatility. If you would invest  738.00  in X FAB Silicon Foundries on October 10, 2024 and sell it today you would lose (243.00) from holding X FAB Silicon Foundries or give up 32.93% of portfolio value over 90 days.

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

WIMFARM SA EO  vs.  X FAB Silicon Foundries

WIMFARM SA EO

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA reported solid returns over the last few months and may actually be approaching a breakup point.

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 rather sound fundamental drivers, X FAB is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WIMFARM SA and X FAB

The main advantage of trading using opposite WIMFARM SA and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA 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.

The idea behind WIMFARM SA EO 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.