Correlation Between X-FAB Silicon and Kunlun Energy

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

Diversification Opportunities for X-FAB Silicon and Kunlun Energy

0.37

Correlation Coefficient

X-FAB Silicon  Kunlun Energy

Weak diversification

The 3 months correlation between X-FAB and Kunlun is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Kunlun Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunlun Energy 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 Kunlun Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunlun Energy has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Kunlun Energy go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Kunlun Energy

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Kunlun Energy. In addition to that, X-FAB Silicon is 1.42 times more volatile than Kunlun Energy. It trades about -0.04 of its total potential returns per unit of risk. Kunlun Energy is currently generating about 0.01 per unit of volatility. If you would invest  95.00  in Kunlun Energy on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Kunlun Energy or generate 0.0% 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 Foundries  vs.  Kunlun Energy

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Kunlun Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kunlun Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking indicators, Kunlun Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with X-FAB Silicon and Kunlun Energy

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

The idea behind X FAB Silicon Foundries and Kunlun Energy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.