Correlation Between X FAB and Apollo Investment

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

Diversification Opportunities for X FAB and Apollo Investment

-0.37

Correlation Coefficient

X FAB  Apollo Investment

Very good diversification

The 3 months correlation between XFB and Apollo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Apollo Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Investment Corp 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 Apollo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Investment Corp has no effect on the direction of X FAB i.e., X FAB and Apollo Investment go up and down completely randomly.

Pair Corralation between X FAB and Apollo Investment

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Apollo Investment. In addition to that, X FAB is 2.39 times more volatile than Apollo Investment Corp. It trades about -0.06 of its total potential returns per unit of risk. Apollo Investment Corp is currently generating about -0.02 per unit of volatility. If you would invest  1,320  in Apollo Investment Corp on September 21, 2024 and sell it today you would lose (43.00) from holding Apollo Investment Corp or give up 3.26% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Apollo Investment Corp

X FAB Silicon

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, X FAB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apollo Investment Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with X FAB and Apollo Investment

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

The idea behind X FAB Silicon Foundries and Apollo Investment Corp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.