Correlation Between X FAB and Easy Software

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

Diversification Opportunities for X FAB and Easy Software

-0.15

Correlation Coefficient

X FAB  Easy Software

Good diversification

The 3 months correlation between XFB and Easy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG 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 Foundries are associated (or correlated) with Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of X FAB i.e., X FAB and Easy Software go up and down completely randomly.

Pair Corralation between X FAB and Easy Software

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Easy Software. In addition to that, X FAB is 1.19 times more volatile than Easy Software AG. It trades about -0.02 of its total potential returns per unit of risk. Easy Software AG is currently generating about 0.0 per unit of volatility. If you would invest  1,860  in Easy Software AG on December 21, 2024 and sell it today you would lose (40.00) from holding Easy Software AG or give up 2.15% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  Easy Software AG

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

Easy Software AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Easy Software AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Easy Software is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with X FAB and Easy Software

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

The idea behind X FAB Silicon Foundries and Easy Software AG 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.