Correlation Between SPG and Xavis
Can any of the company-specific risk be diversified away by investing in both SPG 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 SPG and Xavis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPG Co and Xavis Co, you can compare the effects of market volatilities on SPG 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 SPG with a short position of Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPG and Xavis.
Diversification Opportunities for SPG and Xavis
Poor diversification
The 3 months correlation between SPG and Xavis is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding SPG Co and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis and SPG 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 SPG Co 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 SPG i.e., SPG and Xavis go up and down completely randomly.
Pair Corralation between SPG and Xavis
Assuming the 90 days trading horizon SPG Co is expected to generate 0.79 times more return on investment than Xavis. However, SPG Co is 1.26 times less risky than Xavis. It trades about -0.02 of its potential returns per unit of risk. Xavis Co is currently generating about -0.02 per unit of risk. If you would invest 3,469,971 in SPG Co on August 27, 2024 and sell it today you would lose (1,254,971) from holding SPG Co or give up 36.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPG Co vs. Xavis Co
Performance |
| Timeline |
| SPG Co |
| Xavis |
SPG and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPG and Xavis
The main advantage of trading using opposite SPG and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPG 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.| SPG vs. Shinil Electronics Co | SPG vs. Samji Electronics Co | SPG vs. Asia Technology Co | SPG vs. LG Household Healthcare |
| Xavis vs. Samsung Electronics Co | Xavis vs. Samsung Electronics Co | Xavis vs. LG Energy Solution | Xavis vs. SK Hynix |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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