Correlation Between X Fab and Apple

Can any of the company-specific risk be diversified away by investing in both X Fab and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X Fab Silicon and Apple Inc, you can compare the effects of market volatilities on X Fab and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and Apple.

Diversification Opportunities for X Fab and Apple

0.33

Correlation Coefficient

X Fab  Apple

Weak diversification

The 3 months correlation between XFB and Apple is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of X Fab i.e., X Fab and Apple go up and down completely randomly.

Pair Corralation between X Fab and Apple

Assuming the 90 days horizon X Fab Silicon is expected to generate 1.96 times more return on investment than Apple. However, X Fab is 1.96 times more volatile than Apple Inc. It trades about 0.1 of its potential returns per unit of risk. Apple Inc is currently generating about 0.03 per unit of risk. If you would invest  420.00  in X Fab Silicon on November 29, 2024 and sell it today you would earn a total of  69.00  from holding X Fab Silicon or generate 16.43% return on investment over 90 days.

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

X Fab Silicon  vs.  Apple Inc

X Fab Silicon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in X Fab Silicon are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, X Fab reported solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Apple is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with X Fab and Apple

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

The idea behind X Fab Silicon and Apple Inc 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.