Correlation Between X FAB and Nomura Holdings

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

Diversification Opportunities for X FAB and Nomura Holdings

-0.12

Correlation Coefficient

X FAB  Nomura Holdings

Good diversification

The 3 months correlation between XFB and Nomura is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of X FAB i.e., X FAB and Nomura Holdings go up and down completely randomly.

Pair Corralation between X FAB and Nomura Holdings

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Nomura Holdings. In addition to that, X FAB is 1.12 times more volatile than Nomura Holdings. It trades about -0.09 of its total potential returns per unit of risk. Nomura Holdings is currently generating about 0.03 per unit of volatility. If you would invest  559.00  in Nomura Holdings on December 25, 2024 and sell it today you would earn a total of  16.00  from holding Nomura Holdings or generate 2.86% 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.  Nomura Holdings

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 unsteady performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nomura Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nomura Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with X FAB and Nomura Holdings

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

The idea behind X FAB Silicon Foundries and Nomura Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..