Correlation Between X FAB and Ecovyst

Can any of the company-specific risk be diversified away by investing in both X FAB and Ecovyst 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 Ecovyst 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 Ecovyst, you can compare the effects of market volatilities on X FAB and Ecovyst 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 Ecovyst. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Ecovyst.

Diversification Opportunities for X FAB and Ecovyst

-0.9

Correlation Coefficient

X FAB  Ecovyst

Pay attention - limited upside

The 3 months correlation between XFABF and Ecovyst is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst 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 Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of X FAB i.e., X FAB and Ecovyst go up and down completely randomly.

Pair Corralation between X FAB and Ecovyst

Assuming the 90 days horizon X FAB Silicon Foundries is expected to under-perform the Ecovyst. But the pink sheet apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.14 times less risky than Ecovyst. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Ecovyst is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Ecovyst on October 6, 2024 and sell it today you would lose (26.00) from holding Ecovyst or give up 3.25% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Ecovyst

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.

Ecovyst

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and Ecovyst

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

The idea behind X FAB Silicon Foundries and Ecovyst 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.