Correlation Between CMG Cleantech and X Fab

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Can any of the company-specific risk be diversified away by investing in both CMG Cleantech 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 CMG Cleantech and X Fab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMG Cleantech SA and X Fab Silicon, you can compare the effects of market volatilities on CMG Cleantech 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 CMG Cleantech with a short position of X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Cleantech and X Fab.

Diversification Opportunities for CMG Cleantech and X Fab

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between CMG and XFAB is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA 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 CMG Cleantech 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 CMG Cleantech SA 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 CMG Cleantech i.e., CMG Cleantech and X Fab go up and down completely randomly.

Pair Corralation between CMG Cleantech and X Fab

Assuming the 90 days trading horizon CMG Cleantech SA is expected to generate 1.44 times more return on investment than X Fab. However, CMG Cleantech is 1.44 times more volatile than X Fab Silicon. It trades about 0.23 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.07 per unit of risk. If you would invest  68.00  in CMG Cleantech SA on September 4, 2024 and sell it today you would earn a total of  55.00  from holding CMG Cleantech SA or generate 80.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

CMG Cleantech SA  vs.  X Fab Silicon

 Performance 
       Timeline  
CMG Cleantech SA 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in CMG Cleantech SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CMG Cleantech 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

 
Weak
 
Strong
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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CMG Cleantech and X Fab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CMG Cleantech and X Fab

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

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