Correlation Between Align Technology and X FAB

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

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

Diversification Opportunities for Align Technology and X FAB

0.63

Correlation Coefficient

Align Technology  X FAB

Poor diversification

The 3 months correlation between Align and XFB is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Align Technology 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 Align Technology 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 Align Technology are associated (or correlated) with X FAB. 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 Align Technology i.e., Align Technology and X FAB go up and down completely randomly.

Pair Corralation between Align Technology and X FAB

Assuming the 90 days horizon Align Technology is expected to generate 4.63 times less return on investment than X FAB. But when comparing it to its historical volatility, Align Technology is 1.23 times less risky than X FAB. It trades about 0.08 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  411.00  in X FAB Silicon Foundries on April 20, 2025 and sell it today you would earn a total of  259.00  from holding X FAB Silicon Foundries or generate 63.02% return on investment over 90 days.

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

Align Technology  vs.  X FAB Silicon Foundries

Align Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Align Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Align Technology may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, X FAB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Align Technology and X FAB

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

The idea behind Align Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.