Correlation Between Xavis and SFA Engineering
Can any of the company-specific risk be diversified away by investing in both Xavis and SFA Engineering 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 Xavis and SFA Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and SFA Engineering, you can compare the effects of market volatilities on Xavis and SFA Engineering 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 Xavis with a short position of SFA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and SFA Engineering.
Diversification Opportunities for Xavis and SFA Engineering
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xavis and SFA is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering and Xavis 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 Xavis Co are associated (or correlated) with SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of Xavis i.e., Xavis and SFA Engineering go up and down completely randomly.
Pair Corralation between Xavis and SFA Engineering
Assuming the 90 days trading horizon Xavis Co is expected to generate 3.69 times more return on investment than SFA Engineering. However, Xavis is 3.69 times more volatile than SFA Engineering. It trades about 0.18 of its potential returns per unit of risk. SFA Engineering is currently generating about 0.18 per unit of risk. If you would invest 143,000 in Xavis Co on November 29, 2024 and sell it today you would earn a total of 32,000 from holding Xavis Co or generate 22.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. SFA Engineering
Performance |
| Timeline |
| Xavis |
| SFA Engineering |
Xavis and SFA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and SFA Engineering
The main advantage of trading using opposite Xavis and SFA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis position performs unexpectedly, SFA Engineering 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 SFA Engineering will offset losses from the drop in SFA Engineering's long position.| Xavis vs. Korea Computer | Xavis vs. Samsung Life Insurance | Xavis vs. BIT Computer Co | Xavis vs. LG Display 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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