Correlation Between X-FAB Silicon and Amkor Technology

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

Diversification Opportunities for X-FAB Silicon and Amkor Technology

0.69

Correlation Coefficient

X-FAB Silicon  Amkor Technology

Poor diversification

The 3 months correlation between X-FAB and Amkor is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology 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 Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Amkor Technology go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Amkor Technology

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.0 times more return on investment than Amkor Technology. However, X FAB Silicon Foundries is 1.0 times less risky than Amkor Technology. It trades about -0.06 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.18 per unit of risk. If you would invest  488.00  in X FAB Silicon Foundries on December 21, 2024 and sell it today you would lose (51.00) from holding X FAB Silicon Foundries or give up 10.45% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Amkor Technology

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 latest fragile performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Amkor Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amkor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with X-FAB Silicon and Amkor Technology

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

The idea behind X FAB Silicon Foundries and Amkor Technology 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..