Correlation Between Advanced Micro and X Fab

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

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

Diversification Opportunities for Advanced Micro and X Fab

0.61

Correlation Coefficient

Advanced Micro  X Fab

Poor diversification

The 3 months correlation between Advanced and XFB is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon and Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and X Fab go up and down completely randomly.

Pair Corralation between Advanced Micro and X Fab

Assuming the 90 days horizon Advanced Micro Devices is expected to under-perform the X Fab. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Micro Devices is 1.06 times less risky than X Fab. The stock trades about -0.12 of its potential returns per unit of risk. The X Fab Silicon is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  496.00  in X Fab Silicon on December 30, 2024 and sell it today you would lose (96.00) from holding X Fab Silicon or give up 19.35% of portfolio value over 90 days.

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

Advanced Micro Devices  vs.  X Fab Silicon

Advanced Micro Devices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

X Fab Silicon

Risk-Adjusted Performance

Very Weak

Over the last 90 days X Fab Silicon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Advanced Micro and X Fab

The main advantage of trading using opposite Advanced Micro and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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 Advanced Micro Devices and X Fab Silicon 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.