Correlation Between Seche Environnem and X Fab

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

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

Diversification Opportunities for Seche Environnem and X Fab

-0.24

Correlation Coefficient

Seche Environnem  X Fab

Very good diversification

The 3 months correlation between Seche and XFAB is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Seche Environnem 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 Seche Environnem 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 Seche Environnem 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 Seche Environnem i.e., Seche Environnem and X Fab go up and down completely randomly.

Pair Corralation between Seche Environnem and X Fab

Assuming the 90 days trading horizon Seche Environnem is expected to under-perform the X Fab. But the stock apears to be less risky and, when comparing its historical volatility, Seche Environnem is 2.2 times less risky than X Fab. The stock trades about -0.21 of its potential returns per unit of risk. The X Fab Silicon is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  463.00  in X Fab Silicon on October 11, 2024 and sell it today you would earn a total of  32.00  from holding X Fab Silicon or generate 6.91% return on investment over 90 days.

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

Seche Environnem  vs.  X Fab Silicon

Seche Environnem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seche Environnem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

X Fab Silicon

Risk-Adjusted Performance

0 of 100

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 somewhat strong basic indicators, X Fab is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seche Environnem and X Fab

The main advantage of trading using opposite Seche Environnem and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seche Environnem 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 Seche Environnem 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.