Correlation Between X-FAB Silicon and RYOHIN UNSPADR/1

Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and RYOHIN UNSPADR/1 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 RYOHIN UNSPADR/1 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 RYOHIN UNSPADR1, you can compare the effects of market volatilities on X-FAB Silicon and RYOHIN UNSPADR/1 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 RYOHIN UNSPADR/1. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and RYOHIN UNSPADR/1.

Diversification Opportunities for X-FAB Silicon and RYOHIN UNSPADR/1

-0.09

Correlation Coefficient

X-FAB Silicon  RYOHIN UNSPADR/1

Good diversification

The 3 months correlation between X-FAB and RYOHIN is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and RYOHIN UNSPADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RYOHIN UNSPADR/1 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 RYOHIN UNSPADR/1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RYOHIN UNSPADR/1 has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and RYOHIN UNSPADR/1 go up and down completely randomly.

Pair Corralation between X-FAB Silicon and RYOHIN UNSPADR/1

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the RYOHIN UNSPADR/1. In addition to that, X-FAB Silicon is 1.31 times more volatile than RYOHIN UNSPADR1. It trades about -0.02 of its total potential returns per unit of risk. RYOHIN UNSPADR1 is currently generating about 0.08 per unit of volatility. If you would invest  2,100  in RYOHIN UNSPADR1 on December 20, 2024 and sell it today you would earn a total of  180.00  from holding RYOHIN UNSPADR1 or generate 8.57% 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 Foundries  vs.  RYOHIN UNSPADR1

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 Silicon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

RYOHIN UNSPADR/1

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RYOHIN UNSPADR1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, RYOHIN UNSPADR/1 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with X-FAB Silicon and RYOHIN UNSPADR/1

The main advantage of trading using opposite X-FAB Silicon and RYOHIN UNSPADR/1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, RYOHIN UNSPADR/1 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 RYOHIN UNSPADR/1 will offset losses from the drop in RYOHIN UNSPADR/1's long position.

The idea behind X FAB Silicon Foundries and RYOHIN UNSPADR1 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.