Correlation Between X-FAB Silicon and Power Assets

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

Diversification Opportunities for X-FAB Silicon and Power Assets

-0.21

Correlation Coefficient

X-FAB Silicon  Power Assets

Very good diversification

The 3 months correlation between X-FAB and Power is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Power Assets go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Power Assets

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Power Assets. In addition to that, X-FAB Silicon is 2.17 times more volatile than Power Assets Holdings. It trades about -0.01 of its total potential returns per unit of risk. Power Assets Holdings is currently generating about 0.17 per unit of volatility. If you would invest  575.00  in Power Assets Holdings on October 9, 2024 and sell it today you would earn a total of  75.00  from holding Power Assets Holdings or generate 13.04% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  Power Assets Holdings

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.

Power Assets Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Power Assets Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Power Assets reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X-FAB Silicon and Power Assets

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

The idea behind X FAB Silicon Foundries and Power Assets Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.