Correlation Between X-FAB Silicon and Universal Health

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

Diversification Opportunities for X-FAB Silicon and Universal Health

-0.07

Correlation Coefficient

X-FAB Silicon  Universal Health

Good diversification

The 3 months correlation between X-FAB and Universal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services 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 Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and Universal Health go up and down completely randomly.

Pair Corralation between X-FAB Silicon and Universal Health

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.17 times more return on investment than Universal Health. However, X-FAB Silicon is 1.17 times more volatile than Universal Health Services. It trades about 0.32 of its potential returns per unit of risk. Universal Health Services is currently generating about 0.09 per unit of risk. If you would invest  561.00  in X FAB Silicon Foundries on April 8, 2025 and sell it today you would earn a total of  96.00  from holding X FAB Silicon Foundries or generate 17.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

X FAB Silicon Foundries  vs.  Universal Health Services

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 31 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, X-FAB Silicon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Universal Health Services

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Health Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Universal Health may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with X-FAB Silicon and Universal Health

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

The idea behind X FAB Silicon Foundries and Universal Health Services 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.