Correlation Between X FAB and Meiko Electronics

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

Diversification Opportunities for X FAB and Meiko Electronics

0.48

Correlation Coefficient

X FAB  Meiko Electronics

Very weak diversification

The 3 months correlation between XFB and Meiko is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics 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 Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of X FAB i.e., X FAB and Meiko Electronics go up and down completely randomly.

Pair Corralation between X FAB and Meiko Electronics

Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 0.91 times more return on investment than Meiko Electronics. However, X FAB Silicon Foundries is 1.09 times less risky than Meiko Electronics. It trades about 0.22 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about 0.05 per unit of risk. If you would invest  480.00  in X FAB Silicon Foundries on April 24, 2025 and sell it today you would earn a total of  175.00  from holding X FAB Silicon Foundries or generate 36.46% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  Meiko Electronics Co

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 fragile fundamental drivers, X FAB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Meiko Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Meiko Electronics Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Meiko Electronics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with X FAB and Meiko Electronics

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

The idea behind X FAB Silicon Foundries and Meiko Electronics Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.