Correlation Between Xavis and High Tech
Can any of the company-specific risk be diversified away by investing in both Xavis and High Tech 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 High Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and High Tech Pharm, you can compare the effects of market volatilities on Xavis and High Tech 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 High Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and High Tech.
Diversification Opportunities for Xavis and High Tech
Excellent diversification
The 3 months correlation between Xavis and High is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and High Tech Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Tech Pharm 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 High Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Tech Pharm has no effect on the direction of Xavis i.e., Xavis and High Tech go up and down completely randomly.
Pair Corralation between Xavis and High Tech
Assuming the 90 days trading horizon Xavis Co is expected to under-perform the High Tech. In addition to that, Xavis is 1.26 times more volatile than High Tech Pharm. It trades about -0.41 of its total potential returns per unit of risk. High Tech Pharm is currently generating about -0.01 per unit of volatility. If you would invest 1,530,000 in High Tech Pharm on August 25, 2024 and sell it today you would lose (13,000) from holding High Tech Pharm or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. High Tech Pharm
Performance |
| Timeline |
| Xavis |
| High Tech Pharm |
Xavis and High Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and High Tech
The main advantage of trading using opposite Xavis and High Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis position performs unexpectedly, High Tech 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 High Tech will offset losses from the drop in High Tech's long position.The idea behind Xavis Co and High Tech Pharm 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.| High Tech vs. DB Financial Investment | High Tech vs. Total Soft Bank | High Tech vs. Korean Reinsurance Co | High Tech vs. Hyundai Home Shopping |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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