Correlation Between US Physical and X FAB

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

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

Diversification Opportunities for US Physical and X FAB

0.66

Correlation Coefficient

US Physical  X FAB

Poor diversification

The 3 months correlation between UPH and XFB is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding US Physical Therapy 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 US Physical 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 US Physical Therapy 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 US Physical i.e., US Physical and X FAB go up and down completely randomly.

Pair Corralation between US Physical and X FAB

Assuming the 90 days horizon US Physical Therapy is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, US Physical Therapy is 1.5 times less risky than X FAB. The stock trades about -0.2 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  476.00  in X FAB Silicon Foundries on December 20, 2024 and sell it today you would lose (24.00) from holding X FAB Silicon Foundries or give up 5.04% of portfolio value over 90 days.

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

US Physical Therapy  vs.  X FAB Silicon Foundries

US Physical Therapy

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Physical Therapy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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.

X FAB Silicon

Risk-Adjusted Performance

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 rather sound fundamental drivers, X FAB is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with US Physical and X FAB

The main advantage of trading using opposite US Physical and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Physical 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 US Physical Therapy 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.