Correlation Between X FAB and Chemours

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

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

Diversification Opportunities for X FAB and Chemours

-0.48

Correlation Coefficient

X FAB  Chemours

Very good diversification

The 3 months correlation between XFABF and Chemours is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Foundries are associated (or correlated) with Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of X FAB i.e., X FAB and Chemours go up and down completely randomly.

Pair Corralation between X FAB and Chemours

Assuming the 90 days horizon X FAB Silicon Foundries is expected to generate 0.92 times more return on investment than Chemours. However, X FAB Silicon Foundries is 1.09 times less risky than Chemours. It trades about -0.06 of its potential returns per unit of risk. Chemours Co is currently generating about -0.08 per unit of risk. If you would invest  559.00  in X FAB Silicon Foundries on October 6, 2024 and sell it today you would lose (67.00) from holding X FAB Silicon Foundries or give up 11.99% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Chemours Co

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.

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with X FAB and Chemours

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

The idea behind X FAB Silicon Foundries and Chemours Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.