Correlation Between X-FAB Silicon and Vienna Insurance

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

Diversification Opportunities for X-FAB Silicon and Vienna Insurance

-0.42

Correlation Coefficient

X-FAB Silicon  Vienna Insurance

Very good diversification

The 3 months correlation between X-FAB and Vienna is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Vienna Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vienna Insurance 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 Vienna Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vienna Insurance has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Vienna Insurance go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Vienna Insurance

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Vienna Insurance. In addition to that, X-FAB Silicon is 1.96 times more volatile than Vienna Insurance Group. It trades about -0.02 of its total potential returns per unit of risk. Vienna Insurance Group is currently generating about 0.37 per unit of volatility. If you would invest  2,995  in Vienna Insurance Group on December 20, 2024 and sell it today you would earn a total of  985.00  from holding Vienna Insurance Group or generate 32.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

X FAB Silicon Foundries  vs.  Vienna Insurance Group

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 rather sound fundamental drivers, X-FAB Silicon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Vienna Insurance

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vienna Insurance Group are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vienna Insurance reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X-FAB Silicon and Vienna Insurance

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

The idea behind X FAB Silicon Foundries and Vienna Insurance Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.