Correlation Between X FAB and UET United

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

Diversification Opportunities for X FAB and UET United

-0.01

Correlation Coefficient

X FAB  UET United

Good diversification

The 3 months correlation between XFB and UET is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and UET United Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UET United Electronic 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 UET United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UET United Electronic has no effect on the direction of X FAB i.e., X FAB and UET United go up and down completely randomly.

Pair Corralation between X FAB and UET United

Assuming the 90 days trading horizon X FAB is expected to generate 1.21 times less return on investment than UET United. But when comparing it to its historical volatility, X FAB Silicon Foundries is 2.37 times less risky than UET United. It trades about 0.15 of its potential returns per unit of risk. UET United Electronic is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  89.00  in UET United Electronic on October 21, 2024 and sell it today you would earn a total of  5.00  from holding UET United Electronic or generate 5.62% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  UET United Electronic

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

UET United Electronic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UET United Electronic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, UET United unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and UET United

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

The idea behind X FAB Silicon Foundries and UET United Electronic 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.