Correlation Between X-FAB Silicon and Kemper

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

Diversification Opportunities for X-FAB Silicon and Kemper

0.15

Correlation Coefficient

X-FAB Silicon  Kemper

Average diversification

The 3 months correlation between X-FAB and Kemper is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and X-FAB Silicon 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 Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Kemper go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Kemper

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Kemper. In addition to that, X-FAB Silicon is 1.27 times more volatile than Kemper. It trades about -0.06 of its total potential returns per unit of risk. Kemper is currently generating about 0.01 per unit of volatility. If you would invest  6,170  in Kemper on December 21, 2024 and sell it today you would earn a total of  30.00  from holding Kemper or generate 0.49% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  Kemper

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 latest fragile performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Kemper

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kemper 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 Silicon and Kemper

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

The idea behind X FAB Silicon Foundries and Kemper 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.