Correlation Between Neogen and X FAB

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

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

Diversification Opportunities for Neogen and X FAB

-0.15

Correlation Coefficient

Neogen  X FAB

Good diversification

The 3 months correlation between Neogen and XFABF is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Neogen 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 Neogen 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 Neogen 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 Neogen i.e., Neogen and X FAB go up and down completely randomly.

Pair Corralation between Neogen and X FAB

Given the investment horizon of 90 days Neogen is expected to generate 1.49 times more return on investment than X FAB. However, Neogen is 1.49 times more volatile than X FAB Silicon Foundries. It trades about -0.01 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.14 per unit of risk. If you would invest  1,237  in Neogen on October 6, 2024 and sell it today you would lose (12.00) from holding Neogen or give up 0.97% of portfolio value over 90 days.

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

Neogen  vs.  X FAB Silicon Foundries

Neogen

Risk-Adjusted Performance

0 of 100

Very Weak

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

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. Despite latest weak performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Neogen and X FAB

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

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.