Correlation Between Exmar NV and X Fab

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

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

Diversification Opportunities for Exmar NV and X Fab

0.46

Correlation Coefficient

Exmar NV  X Fab

Very weak diversification

The 3 months correlation between Exmar and XFAB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Exmar NV and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon and Exmar NV 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 Exmar NV 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 Exmar NV i.e., Exmar NV and X Fab go up and down completely randomly.

Pair Corralation between Exmar NV and X Fab

Assuming the 90 days trading horizon Exmar NV is expected to generate 1.22 times more return on investment than X Fab. However, Exmar NV is 1.22 times more volatile than X Fab Silicon. It trades about 0.12 of its potential returns per unit of risk. X Fab Silicon is currently generating about 0.02 per unit of risk. If you would invest  865.00  in Exmar NV on September 12, 2024 and sell it today you would earn a total of  265.00  from holding Exmar NV or generate 30.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Exmar NV  vs.  X Fab Silicon

Exmar NV

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exmar NV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Exmar NV reported solid returns over the last few months and may actually be approaching a breakup point.

X Fab Silicon

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in X Fab Silicon are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, X Fab is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exmar NV and X Fab

The main advantage of trading using opposite Exmar NV and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exmar NV 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 Exmar NV and X Fab Silicon 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.