Correlation Between Computer and X Fab

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

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

Diversification Opportunities for Computer and X Fab

-0.27

Correlation Coefficient

Computer  X Fab

Very good diversification

The 3 months correlation between Computer and XFB is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Computer And Technologies 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 Computer 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 Computer And Technologies 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 Computer i.e., Computer and X Fab go up and down completely randomly.

Pair Corralation between Computer and X Fab

Assuming the 90 days horizon Computer And Technologies is expected to generate 1.31 times more return on investment than X Fab. However, Computer is 1.31 times more volatile than X Fab Silicon. It trades about 0.04 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.11 per unit of risk. If you would invest  17.00  in Computer And Technologies on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Computer And Technologies or generate 5.88% return on investment over 90 days.

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

Computer And Technologies  vs.  X Fab Silicon

Computer And Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Computer And Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Computer may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Computer and X Fab

The main advantage of trading using opposite Computer and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer 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 Computer And Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.