Correlation Between X-FAB Silicon and Intel

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

Diversification Opportunities for X-FAB Silicon and Intel

-0.44

Correlation Coefficient

X-FAB Silicon  Intel

Very good diversification

The 3 months correlation between X-FAB and Intel is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel and X-FAB Silicon 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Intel go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Intel

Assuming the 90 days horizon X FAB Silicon Foundries is expected to under-perform the Intel. In addition to that, X-FAB Silicon is 1.03 times more volatile than Intel. It trades about -0.04 of its total potential returns per unit of risk. Intel is currently generating about -0.02 per unit of volatility. If you would invest  3,295  in Intel on October 24, 2024 and sell it today you would lose (1,086) from holding Intel or give up 32.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

X FAB Silicon Foundries  vs.  Intel

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 nearly stable fundamental drivers, X-FAB Silicon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with X-FAB Silicon and Intel

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

The idea behind X FAB Silicon Foundries and Intel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.