Correlation Between Hemisphere Energy and X FAB

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

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

Diversification Opportunities for Hemisphere Energy and X FAB

0.32

Correlation Coefficient

Hemisphere Energy  X FAB

Weak diversification

The 3 months correlation between Hemisphere and XFB is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy Corp 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 Hemisphere Energy 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 Hemisphere Energy Corp 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 Hemisphere Energy i.e., Hemisphere Energy and X FAB go up and down completely randomly.

Pair Corralation between Hemisphere Energy and X FAB

Assuming the 90 days trading horizon Hemisphere Energy Corp is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Hemisphere Energy Corp is 2.32 times less risky than X FAB. The stock trades about -0.03 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  508.00  in X FAB Silicon Foundries on September 30, 2024 and sell it today you would lose (7.00) from holding X FAB Silicon Foundries or give up 1.38% of portfolio value over 90 days.

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

Hemisphere Energy Corp  vs.  X FAB Silicon Foundries

Hemisphere Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hemisphere Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hemisphere Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, X FAB is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hemisphere Energy and X FAB

The main advantage of trading using opposite Hemisphere Energy and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy 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 Hemisphere Energy Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.