Correlation Between X FAB and Elis SA
Can any of the company-specific risk be diversified away by investing in both X FAB and Elis SA 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 Elis SA 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 Elis SA, you can compare the effects of market volatilities on X FAB and Elis SA 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 Elis SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Elis SA.
Diversification Opportunities for X FAB and Elis SA
Excellent diversification
The 3 months correlation between XFB and Elis is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA 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 Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of X FAB i.e., X FAB and Elis SA go up and down completely randomly.
Pair Corralation between X FAB and Elis SA
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Elis SA. In addition to that, X FAB is 1.44 times more volatile than Elis SA. It trades about -0.05 of its total potential returns per unit of risk. Elis SA is currently generating about 0.13 per unit of volatility. If you would invest 1,873 in Elis SA on December 18, 2024 and sell it today you would earn a total of 269.00 from holding Elis SA or generate 14.36% return on investment 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. Elis SA
Performance |
Timeline |
X FAB Silicon |
Elis SA |
X FAB and Elis SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with X FAB and Elis SA
The main advantage of trading using opposite X FAB and Elis SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Elis SA 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 Elis SA will offset losses from the drop in Elis SA's long position.X FAB vs. SCANDMEDICAL SOLDK 040 | X FAB vs. De Grey Mining | X FAB vs. PEPTONIC MEDICAL | X FAB vs. Medical Properties Trust |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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