Correlation Between ASM Pacific and X FAB

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

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

Diversification Opportunities for ASM Pacific and X FAB

0.71

Correlation Coefficient

ASM Pacific  X FAB

Poor diversification

The 3 months correlation between ASM and XFB is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ASM Pacific 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 ASM Pacific 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 ASM Pacific 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 ASM Pacific i.e., ASM Pacific and X FAB go up and down completely randomly.

Pair Corralation between ASM Pacific and X FAB

Assuming the 90 days trading horizon ASM Pacific is expected to generate 1.8 times less return on investment than X FAB. But when comparing it to its historical volatility, ASM Pacific Technology is 1.2 times less risky than X FAB. It trades about 0.17 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  423.00  in X FAB Silicon Foundries on April 23, 2025 and sell it today you would earn a total of  232.00  from holding X FAB Silicon Foundries or generate 54.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

ASM Pacific Technology  vs.  X FAB Silicon Foundries

ASM Pacific Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASM Pacific Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASM Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

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 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 ASM Pacific and X FAB

The main advantage of trading using opposite ASM Pacific and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASM Pacific 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 ASM Pacific 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.