Correlation Between X-FAB Silicon and NET Power

Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and NET Power 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 Silicon and NET Power 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 NET Power, you can compare the effects of market volatilities on X-FAB Silicon and NET Power 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 Silicon with a short position of NET Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and NET Power.

Diversification Opportunities for X-FAB Silicon and NET Power

0.78

Correlation Coefficient

X-FAB Silicon  NET Power

Poor diversification

The 3 months correlation between X-FAB and NET is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and NET Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NET Power and X-FAB Silicon 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 NET Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NET Power has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and NET Power go up and down completely randomly.

Pair Corralation between X-FAB Silicon and NET Power

Assuming the 90 days horizon X FAB Silicon Foundries is expected to generate 0.48 times more return on investment than NET Power. However, X FAB Silicon Foundries is 2.08 times less risky than NET Power. It trades about 0.23 of its potential returns per unit of risk. NET Power is currently generating about 0.01 per unit of risk. If you would invest  659.00  in X FAB Silicon Foundries on May 17, 2025 and sell it today you would earn a total of  201.00  from holding X FAB Silicon Foundries or generate 30.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

X FAB Silicon Foundries  vs.  NET Power

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 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, X-FAB Silicon reported solid returns over the last few months and may actually be approaching a breakup point.

NET Power

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in NET Power are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, NET Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X-FAB Silicon and NET Power

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

The idea behind X FAB Silicon Foundries and NET Power 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.