Correlation Between Centaur Media and X FAB

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

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

Diversification Opportunities for Centaur Media and X FAB

0.48

Correlation Coefficient

Centaur Media  X FAB

Very weak diversification

The 3 months correlation between Centaur and 0ROZ is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Media 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 Centaur Media 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 Centaur Media 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 Centaur Media i.e., Centaur Media and X FAB go up and down completely randomly.

Pair Corralation between Centaur Media and X FAB

Assuming the 90 days trading horizon Centaur Media is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Centaur Media is 1.11 times less risky than X FAB. The stock trades about -0.15 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  523.00  in X FAB Silicon Foundries on September 3, 2024 and sell it today you would lose (87.00) from holding X FAB Silicon Foundries or give up 16.63% of portfolio value over 90 days.

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

Centaur Media  vs.  X FAB Silicon Foundries

Centaur Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centaur Media 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Centaur Media and X FAB

The main advantage of trading using opposite Centaur Media and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Media 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 Centaur Media 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.