Correlation Between X FAB and Orix Corp

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

Diversification Opportunities for X FAB and Orix Corp

0.31

Correlation Coefficient

X FAB  Orix Corp

Weak diversification

The 3 months correlation between XFB and Orix is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Orix Corp Ads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orix Corp Ads 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 Orix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orix Corp Ads has no effect on the direction of X FAB i.e., X FAB and Orix Corp go up and down completely randomly.

Pair Corralation between X FAB and Orix Corp

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 2.21 times more return on investment than Orix Corp. However, X FAB is 2.21 times more volatile than Orix Corp Ads. It trades about 0.01 of its potential returns per unit of risk. Orix Corp Ads is currently generating about -0.03 per unit of risk. If you would invest  503.00  in X FAB Silicon Foundries on September 12, 2024 and sell it today you would lose (3.00) from holding X FAB Silicon Foundries or give up 0.6% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Orix Corp Ads

X FAB Silicon

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Orix Corp Ads

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Orix Corp 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 Orix Corp

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

The idea behind X FAB Silicon Foundries and Orix Corp Ads 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.