Correlation Between X-FAB Silicon and FAST RETAIL

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

Diversification Opportunities for X-FAB Silicon and FAST RETAIL

0.58

Correlation Coefficient

X-FAB Silicon  FAST RETAIL

Very weak diversification

The 3 months correlation between X-FAB and FAST is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and FAST RETAIL go up and down completely randomly.

Pair Corralation between X-FAB Silicon and FAST RETAIL

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.56 times more return on investment than FAST RETAIL. However, X-FAB Silicon is 1.56 times more volatile than FAST RETAIL ADR. It trades about 0.01 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.0 per unit of risk. If you would invest  515.00  in X FAB Silicon Foundries on October 23, 2024 and sell it today you would lose (6.00) from holding X FAB Silicon Foundries or give up 1.17% 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.  FAST RETAIL ADR

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

FAST RETAIL ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FAST RETAIL ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FAST RETAIL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with X-FAB Silicon and FAST RETAIL

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

The idea behind X FAB Silicon Foundries and FAST RETAIL ADR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.