Correlation Between X FAB and CITIC Telecom

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

Diversification Opportunities for X FAB and CITIC Telecom

0.62

Correlation Coefficient

X FAB  CITIC Telecom

Poor diversification

The 3 months correlation between XFB and CITIC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and CITIC Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Telecom Intern 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 CITIC Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Telecom Intern has no effect on the direction of X FAB i.e., X FAB and CITIC Telecom go up and down completely randomly.

Pair Corralation between X FAB and CITIC Telecom

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 0.64 times more return on investment than CITIC Telecom. However, X FAB Silicon Foundries is 1.56 times less risky than CITIC Telecom. It trades about 0.22 of its potential returns per unit of risk. CITIC Telecom International is currently generating about 0.07 per unit of risk. If you would invest  482.00  in X FAB Silicon Foundries on April 25, 2025 and sell it today you would earn a total of  177.00  from holding X FAB Silicon Foundries or generate 36.72% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  CITIC Telecom International

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

CITIC Telecom Intern

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CITIC Telecom International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CITIC Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and CITIC Telecom

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

The idea behind X FAB Silicon Foundries and CITIC Telecom International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.