Correlation Between X FAB and ASTRA INTERNATIONAL

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

Diversification Opportunities for X FAB and ASTRA INTERNATIONAL

0.75

Correlation Coefficient

X FAB  ASTRA INTERNATIONAL

Poor diversification

The 3 months correlation between XFB and ASTRA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and ASTRA INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA INTERNATIONAL 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 ASTRA INTERNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA INTERNATIONAL has no effect on the direction of X FAB i.e., X FAB and ASTRA INTERNATIONAL go up and down completely randomly.

Pair Corralation between X FAB and ASTRA INTERNATIONAL

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the ASTRA INTERNATIONAL. In addition to that, X FAB is 1.38 times more volatile than ASTRA INTERNATIONAL. It trades about -0.03 of its total potential returns per unit of risk. ASTRA INTERNATIONAL is currently generating about 0.0 per unit of volatility. If you would invest  33.00  in ASTRA INTERNATIONAL on September 28, 2024 and sell it today you would lose (2.00) from holding ASTRA INTERNATIONAL or give up 6.06% 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.  ASTRA INTERNATIONAL

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. In spite of rather sound fundamental drivers, X FAB is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ASTRA INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASTRA INTERNATIONAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ASTRA INTERNATIONAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with X FAB and ASTRA INTERNATIONAL

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

The idea behind X FAB Silicon Foundries and ASTRA INTERNATIONAL 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.