Correlation Between X Fab and Sartorius Stedim

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

By analyzing existing cross correlation between X Fab Silicon and Sartorius Stedim Biotech, you can compare the effects of market volatilities on X Fab and Sartorius Stedim 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 Sartorius Stedim. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Fab and Sartorius Stedim.

Diversification Opportunities for X Fab and Sartorius Stedim

0.29

Correlation Coefficient

X Fab  Sartorius Stedim

Modest diversification

The 3 months correlation between XFAB and Sartorius is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding X Fab Silicon and Sartorius Stedim Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sartorius Stedim Biotech 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 are associated (or correlated) with Sartorius Stedim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sartorius Stedim Biotech has no effect on the direction of X Fab i.e., X Fab and Sartorius Stedim go up and down completely randomly.

Pair Corralation between X Fab and Sartorius Stedim

Assuming the 90 days trading horizon X Fab Silicon is expected to under-perform the Sartorius Stedim. But the stock apears to be less risky and, when comparing its historical volatility, X Fab Silicon is 1.1 times less risky than Sartorius Stedim. The stock trades about -0.11 of its potential returns per unit of risk. The Sartorius Stedim Biotech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  18,400  in Sartorius Stedim Biotech on August 30, 2024 and sell it today you would lose (400.00) from holding Sartorius Stedim Biotech or give up 2.17% of portfolio value over 90 days.

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

X Fab Silicon  vs.  Sartorius Stedim Biotech

X Fab Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X Fab Silicon has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Sartorius Stedim Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sartorius Stedim Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Sartorius Stedim is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with X Fab and Sartorius Stedim

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

The idea behind X Fab Silicon and Sartorius Stedim Biotech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.