Correlation Between China Yongda and X-FAB Silicon

Can any of the company-specific risk be diversified away by investing in both China Yongda 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 China Yongda 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 China Yongda Automobiles and X FAB Silicon Foundries, you can compare the effects of market volatilities on China Yongda 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 China Yongda with a short position of X-FAB Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Yongda and X-FAB Silicon.

Diversification Opportunities for China Yongda and X-FAB Silicon

-0.53

Correlation Coefficient

China Yongda  X-FAB Silicon

Excellent diversification

The 3 months correlation between China and X-FAB is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding China Yongda Automobiles 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 China Yongda 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 China Yongda Automobiles 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 China Yongda i.e., China Yongda and X-FAB Silicon go up and down completely randomly.

Pair Corralation between China Yongda and X-FAB Silicon

Assuming the 90 days horizon China Yongda is expected to generate 13.48 times less return on investment than X-FAB Silicon. In addition to that, China Yongda is 2.14 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 0.25 per unit of volatility. If you would invest  472.00  in X FAB Silicon Foundries on April 25, 2025 and sell it today you would earn a total of  182.00  from holding X FAB Silicon Foundries or generate 38.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

China Yongda Automobiles  vs.  X FAB Silicon Foundries

China Yongda Automobiles

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Yongda Automobiles has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Yongda is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 19 (%) 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.

Pair Trading with China Yongda and X-FAB Silicon

The main advantage of trading using opposite China Yongda and X-FAB Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Yongda 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 China Yongda Automobiles 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.