Correlation Between X Fab and Speed Rabbit

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

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

Diversification Opportunities for X Fab and Speed Rabbit

-0.2

Correlation Coefficient

X Fab  Speed Rabbit

Good diversification

The 3 months correlation between XFAB and Speed is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and Speed Rabbit Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Speed Rabbit Pizza and X Fab 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 X Fab Silicon are associated (or correlated) with Speed Rabbit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Speed Rabbit Pizza has no effect on the direction of X Fab i.e., X Fab and Speed Rabbit go up and down completely randomly.

Pair Corralation between X Fab and Speed Rabbit

Assuming the 90 days trading horizon X Fab Silicon is expected to under-perform the Speed Rabbit. But the stock apears to be less risky and, when comparing its historical volatility, X Fab Silicon is 3.28 times less risky than Speed Rabbit. The stock trades about -0.05 of its potential returns per unit of risk. The Speed Rabbit Pizza is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,000  in Speed Rabbit Pizza on December 21, 2024 and sell it today you would earn a total of  260.00  from holding Speed Rabbit Pizza or generate 13.0% return on investment over 90 days.

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

X Fab Silicon  vs.  Speed Rabbit Pizza

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 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.

Speed Rabbit Pizza

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Speed Rabbit Pizza are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Speed Rabbit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X Fab and Speed Rabbit

The main advantage of trading using opposite X Fab and Speed Rabbit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Fab position performs unexpectedly, Speed Rabbit 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 Speed Rabbit will offset losses from the drop in Speed Rabbit's long position.

The idea behind X Fab Silicon and Speed Rabbit Pizza 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.