Correlation Between Cloud Air and Xavis
Can any of the company-specific risk be diversified away by investing in both Cloud Air and Xavis 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 Cloud Air and Xavis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cloud Air CoLtd and Xavis Co, you can compare the effects of market volatilities on Cloud Air and Xavis 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 Cloud Air with a short position of Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cloud Air and Xavis.
Diversification Opportunities for Cloud Air and Xavis
Poor diversification
The 3 months correlation between Cloud and Xavis is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Air CoLtd and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis and Cloud Air 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 Cloud Air CoLtd are associated (or correlated) with Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Cloud Air i.e., Cloud Air and Xavis go up and down completely randomly.
Pair Corralation between Cloud Air and Xavis
Assuming the 90 days trading horizon Cloud Air CoLtd is expected to generate 0.52 times more return on investment than Xavis. However, Cloud Air CoLtd is 1.94 times less risky than Xavis. It trades about 0.02 of its potential returns per unit of risk. Xavis Co is currently generating about -0.03 per unit of risk. If you would invest 81,100 in Cloud Air CoLtd on August 25, 2024 and sell it today you would earn a total of 3,400 from holding Cloud Air CoLtd or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cloud Air CoLtd vs. Xavis Co
Performance |
| Timeline |
| Cloud Air CoLtd |
| Xavis |
Cloud Air and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cloud Air and Xavis
The main advantage of trading using opposite Cloud Air and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cloud Air position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' long position.| Cloud Air vs. SK Hynix | Cloud Air vs. People Technology | Cloud Air vs. SIMMTECH Co | Cloud Air vs. Haesung DS Co |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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