Correlation Between X FAB and CLEMONDO GROUP

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

Diversification Opportunities for X FAB and CLEMONDO GROUP

0.15

Correlation Coefficient

X FAB  CLEMONDO GROUP

Average diversification

The 3 months correlation between XFB and CLEMONDO is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and CLEMONDO GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEMONDO GROUP AB 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 CLEMONDO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEMONDO GROUP AB has no effect on the direction of X FAB i.e., X FAB and CLEMONDO GROUP go up and down completely randomly.

Pair Corralation between X FAB and CLEMONDO GROUP

Assuming the 90 days trading horizon X FAB is expected to generate 9.03 times less return on investment than CLEMONDO GROUP. But when comparing it to its historical volatility, X FAB Silicon Foundries is 3.51 times less risky than CLEMONDO GROUP. It trades about 0.02 of its potential returns per unit of risk. CLEMONDO GROUP AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.30  in CLEMONDO GROUP AB on September 17, 2024 and sell it today you would lose (0.14) from holding CLEMONDO GROUP AB or give up 2.64% of portfolio value over 90 days.

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

X FAB Silicon Foundries  vs.  CLEMONDO GROUP AB

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 Foundries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

CLEMONDO GROUP AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLEMONDO GROUP AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CLEMONDO GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X FAB and CLEMONDO GROUP

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

The idea behind X FAB Silicon Foundries and CLEMONDO GROUP AB 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.