Correlation Between X-FAB Silicon and Altia Oyj

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

Diversification Opportunities for X-FAB Silicon and Altia Oyj

0.54

Correlation Coefficient

X-FAB Silicon  Altia Oyj

Very weak diversification

The 3 months correlation between X-FAB and Altia is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Altia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altia Oyj 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 Altia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altia Oyj has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Altia Oyj go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Altia Oyj

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.12 times more return on investment than Altia Oyj. However, X-FAB Silicon is 1.12 times more volatile than Altia Oyj. It trades about -0.02 of its potential returns per unit of risk. Altia Oyj is currently generating about -0.07 per unit of risk. If you would invest  754.00  in X FAB Silicon Foundries on October 4, 2024 and sell it today you would lose (256.00) from holding X FAB Silicon Foundries or give up 33.95% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Altia Oyj

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 comparatively stable basic indicators, X-FAB Silicon is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Altia Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altia Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with X-FAB Silicon and Altia Oyj

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

The idea behind X FAB Silicon Foundries and Altia Oyj 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.