Correlation Between X-FAB Silicon and JinkoSolar Holding

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

Diversification Opportunities for X-FAB Silicon and JinkoSolar Holding

0.3

Correlation Coefficient

X-FAB Silicon  JinkoSolar Holding

Weak diversification

The 3 months correlation between X-FAB and JinkoSolar is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and JinkoSolar Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JinkoSolar Holding 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 JinkoSolar Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JinkoSolar Holding has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and JinkoSolar Holding go up and down completely randomly.

Pair Corralation between X-FAB Silicon and JinkoSolar Holding

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the JinkoSolar Holding. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.35 times less risky than JinkoSolar Holding. The stock trades about -0.08 of its potential returns per unit of risk. The JinkoSolar Holding Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,415  in JinkoSolar Holding Co on December 22, 2024 and sell it today you would lose (320.00) from holding JinkoSolar Holding Co or give up 13.25% 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.  JinkoSolar Holding Co

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 fragile performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

JinkoSolar Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days JinkoSolar Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with X-FAB Silicon and JinkoSolar Holding

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

The idea behind X FAB Silicon Foundries and JinkoSolar Holding Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.