Correlation Between X FAB and CRRC

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

Diversification Opportunities for X FAB and CRRC

0.0

Correlation Coefficient

X FAB  CRRC

Pay attention - limited upside

The 3 months correlation between XFB and CRRC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited 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 CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of X FAB i.e., X FAB and CRRC go up and down completely randomly.

Pair Corralation between X FAB and CRRC

If you would invest  61.00  in CRRC Limited on December 20, 2024 and sell it today you would earn a total of  0.00  from holding CRRC Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

X FAB Silicon Foundries  vs.  CRRC Limited

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

CRRC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRRC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CRRC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with X FAB and CRRC

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

The idea behind X FAB Silicon Foundries and CRRC Limited 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.