Correlation Between X FAB and Polski Koncern

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

Diversification Opportunities for X FAB and Polski Koncern

0.41

Correlation Coefficient

X FAB  Polski Koncern

Very weak diversification

The 3 months correlation between XFB and Polski is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy 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 Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of X FAB i.e., X FAB and Polski Koncern go up and down completely randomly.

Pair Corralation between X FAB and Polski Koncern

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Polski Koncern. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.33 times less risky than Polski Koncern. The stock trades about -0.02 of its potential returns per unit of risk. The Polski Koncern Naftowy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  611.00  in Polski Koncern Naftowy on October 5, 2024 and sell it today you would earn a total of  558.00  from holding Polski Koncern Naftowy or generate 91.33% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  Polski Koncern Naftowy

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.

Polski Koncern Naftowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polski Koncern Naftowy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with X FAB and Polski Koncern

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

The idea behind X FAB Silicon Foundries and Polski Koncern Naftowy 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.