Correlation Between Xavis and Okins Electronics
Can any of the company-specific risk be diversified away by investing in both Xavis and Okins Electronics 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 Okins Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and Okins Electronics Co, you can compare the effects of market volatilities on Xavis and Okins Electronics 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 Okins Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and Okins Electronics.
Diversification Opportunities for Xavis and Okins Electronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xavis and Okins is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and Okins Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okins Electronics 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 Okins Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okins Electronics has no effect on the direction of Xavis i.e., Xavis and Okins Electronics go up and down completely randomly.
Pair Corralation between Xavis and Okins Electronics
Assuming the 90 days trading horizon Xavis Co is expected to under-perform the Okins Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Xavis Co is 1.43 times less risky than Okins Electronics. The stock trades about -0.13 of its potential returns per unit of risk. The Okins Electronics Co is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 712,000 in Okins Electronics Co on September 3, 2024 and sell it today you would lose (271,000) from holding Okins Electronics Co or give up 38.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. Okins Electronics Co
Performance |
| Timeline |
| Xavis |
| Okins Electronics |
Xavis and Okins Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and Okins Electronics
The main advantage of trading using opposite Xavis and Okins Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis position performs unexpectedly, Okins Electronics 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 Okins Electronics will offset losses from the drop in Okins Electronics' long position.| Xavis vs. DSC Investment | Xavis vs. SK Chemicals Co | Xavis vs. Golden Bridge Investment | Xavis vs. Woori Technology Investment |
| Okins Electronics vs. DB Financial Investment | Okins Electronics vs. Polaris Office Corp | Okins Electronics vs. Innowireless Co | Okins Electronics vs. NICE Information Service |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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