Correlation Between X FAB and Sdiptech

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

Diversification Opportunities for X FAB and Sdiptech

0.6

Correlation Coefficient

X FAB  Sdiptech

Poor diversification

The 3 months correlation between 0ROZ and Sdiptech is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Sdiptech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sdiptech AB 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 Sdiptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sdiptech AB has no effect on the direction of X FAB i.e., X FAB and Sdiptech go up and down completely randomly.

Pair Corralation between X FAB and Sdiptech

Assuming the 90 days trading horizon X FAB is expected to generate 3.2 times less return on investment than Sdiptech. But when comparing it to its historical volatility, X FAB Silicon Foundries is 6.73 times less risky than Sdiptech. It trades about 0.42 of its potential returns per unit of risk. Sdiptech AB is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  22,120  in Sdiptech AB on April 5, 2025 and sell it today you would earn a total of  14,880  from holding Sdiptech AB or generate 67.27% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  Sdiptech AB

X FAB Silicon

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in X FAB Silicon Foundries are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, X FAB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sdiptech AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sdiptech AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sdiptech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and Sdiptech

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

The idea behind X FAB Silicon Foundries and Sdiptech AB 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.