Correlation Between X FAB and AdvancedAdvT

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

Diversification Opportunities for X FAB and AdvancedAdvT

0.79

Correlation Coefficient

X FAB  AdvancedAdvT

Poor diversification

The 3 months correlation between 0ROZ and AdvancedAdvT is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and AdvancedAdvT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvancedAdvT 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 AdvancedAdvT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvancedAdvT has no effect on the direction of X FAB i.e., X FAB and AdvancedAdvT go up and down completely randomly.

Pair Corralation between X FAB and AdvancedAdvT

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.43 times more return on investment than AdvancedAdvT. However, X FAB is 1.43 times more volatile than AdvancedAdvT. It trades about 0.32 of its potential returns per unit of risk. AdvancedAdvT is currently generating about 0.22 per unit of risk. If you would invest  406.00  in X FAB Silicon Foundries on April 21, 2025 and sell it today you would earn a total of  265.00  from holding X FAB Silicon Foundries or generate 65.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

X FAB Silicon Foundries  vs.  AdvancedAdvT

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

AdvancedAdvT

Risk-Adjusted Performance

Solid

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

Pair Trading with X FAB and AdvancedAdvT

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

The idea behind X FAB Silicon Foundries and AdvancedAdvT 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.