Correlation Between ELECOM CO and XAAR PLC
Can any of the company-specific risk be diversified away by investing in both ELECOM CO and XAAR PLC 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 ELECOM CO and XAAR PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELECOM LTD and XAAR PLC LS 10, you can compare the effects of market volatilities on ELECOM CO and XAAR PLC 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 ELECOM CO with a short position of XAAR PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECOM CO and XAAR PLC.
Diversification Opportunities for ELECOM CO and XAAR PLC
Very good diversification
The 3 months correlation between ELECOM and XAAR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding ELECOM LTD and XAAR PLC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAAR PLC LS and ELECOM CO 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 ELECOM LTD are associated (or correlated) with XAAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAAR PLC LS has no effect on the direction of ELECOM CO i.e., ELECOM CO and XAAR PLC go up and down completely randomly.
Pair Corralation between ELECOM CO and XAAR PLC
Assuming the 90 days horizon ELECOM LTD is expected to generate 0.43 times more return on investment than XAAR PLC. However, ELECOM LTD is 2.31 times less risky than XAAR PLC. It trades about 0.03 of its potential returns per unit of risk. XAAR PLC LS 10 is currently generating about -0.01 per unit of risk. If you would invest 793.00 in ELECOM LTD on January 12, 2025 and sell it today you would earn a total of 162.00 from holding ELECOM LTD or generate 20.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELECOM LTD vs. XAAR PLC LS 10
Performance |
| Timeline |
| ELECOM LTD |
| XAAR PLC LS |
ELECOM CO and XAAR PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELECOM CO and XAAR PLC
The main advantage of trading using opposite ELECOM CO and XAAR PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELECOM CO position performs unexpectedly, XAAR PLC 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 XAAR PLC will offset losses from the drop in XAAR PLC's long position.| ELECOM CO vs. Magnachip Semiconductor | ELECOM CO vs. JLF INVESTMENT | ELECOM CO vs. Chuangs China Investments | ELECOM CO vs. EAT WELL INVESTMENT |
| XAAR PLC vs. HP Inc | XAAR PLC vs. Western Digital | XAAR PLC vs. Corsair Gaming | XAAR PLC vs. Mhlbauer Holding AG |
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 CEOs Directory module to screen CEOs from public companies around the world.
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