Correlation Between X-FAB Silicon and Shenandoah Telecommunicatio

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

Diversification Opportunities for X-FAB Silicon and Shenandoah Telecommunicatio

-0.24

Correlation Coefficient

X-FAB Silicon  Shenandoah Telecommunicatio

Very good diversification

The 3 months correlation between X-FAB and Shenandoah is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Shenandoah Telecommunicatio

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Shenandoah Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 1.17 times less risky than Shenandoah Telecommunicatio. The stock trades about -0.02 of its potential returns per unit of risk. The Shenandoah Telecommunications is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,670  in Shenandoah Telecommunications on October 11, 2024 and sell it today you would lose (480.00) from holding Shenandoah Telecommunications or give up 28.74% 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.  Shenandoah Telecommunications

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.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Shenandoah Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with X-FAB Silicon and Shenandoah Telecommunicatio

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

The idea behind X FAB Silicon Foundries and Shenandoah Telecommunications 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.