Correlation Between X FAB and Ryman Healthcare

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

Diversification Opportunities for X FAB and Ryman Healthcare

-0.37

Correlation Coefficient

X FAB  Ryman Healthcare

Very good diversification

The 3 months correlation between XFB and Ryman is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Ryman Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ryman Healthcare 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 Ryman Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ryman Healthcare has no effect on the direction of X FAB i.e., X FAB and Ryman Healthcare go up and down completely randomly.

Pair Corralation between X FAB and Ryman Healthcare

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Ryman Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.3 times less risky than Ryman Healthcare. The stock trades about 0.0 of its potential returns per unit of risk. The Ryman Healthcare Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  237.00  in Ryman Healthcare Limited on October 9, 2024 and sell it today you would earn a total of  12.00  from holding Ryman Healthcare Limited or generate 5.06% 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.  Ryman Healthcare Limited

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

Ryman Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind X FAB Silicon Foundries and Ryman Healthcare 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..