Correlation Between Westlake Chemical and X-FAB Silicon

Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and X-FAB Silicon 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 Westlake Chemical and X-FAB Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Westlake Chemical Corp and X FAB Silicon Foundries, you can compare the effects of market volatilities on Westlake Chemical and X-FAB Silicon 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 Westlake Chemical with a short position of X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and X-FAB Silicon.

Diversification Opportunities for Westlake Chemical and X-FAB Silicon

-0.08

Correlation Coefficient

Westlake Chemical  X-FAB Silicon

Good diversification

The 3 months correlation between Westlake and X-FAB is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical Corp and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and Westlake Chemical 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 Westlake Chemical Corp are associated (or correlated) with X-FAB Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and X-FAB Silicon go up and down completely randomly.

Pair Corralation between Westlake Chemical and X-FAB Silicon

Assuming the 90 days trading horizon Westlake Chemical Corp is expected to under-perform the X-FAB Silicon. In addition to that, Westlake Chemical is 1.39 times more volatile than X FAB Silicon Foundries. It trades about -0.01 of its total potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.23 per unit of volatility. If you would invest  479.00  in X FAB Silicon Foundries on April 25, 2025 and sell it today you would earn a total of  173.00  from holding X FAB Silicon Foundries or generate 36.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Westlake Chemical Corp  vs.  X FAB Silicon Foundries

Westlake Chemical Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westlake Chemical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westlake Chemical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

X FAB Silicon

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, X-FAB Silicon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westlake Chemical and X-FAB Silicon

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

The idea behind Westlake Chemical Corp and X FAB Silicon Foundries 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.