Correlation Between Edita Food and Xeros Technology
Can any of the company-specific risk be diversified away by investing in both Edita Food and Xeros Technology 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 Edita Food and Xeros Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Xeros Technology Group, you can compare the effects of market volatilities on Edita Food and Xeros Technology 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 Edita Food with a short position of Xeros Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Xeros Technology.
Diversification Opportunities for Edita Food and Xeros Technology
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Edita and Xeros is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries and Xeros Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeros Technology and Edita Food 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 Edita Food Industries are associated (or correlated) with Xeros Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeros Technology has no effect on the direction of Edita Food i.e., Edita Food and Xeros Technology go up and down completely randomly.
Pair Corralation between Edita Food and Xeros Technology
Assuming the 90 days trading horizon Edita Food Industries is expected to generate 0.5 times more return on investment than Xeros Technology. However, Edita Food Industries is 2.02 times less risky than Xeros Technology. It trades about -0.05 of its potential returns per unit of risk. Xeros Technology Group is currently generating about -0.1 per unit of risk. If you would invest 246.00 in Edita Food Industries on October 16, 2024 and sell it today you would lose (46.00) from holding Edita Food Industries or give up 18.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
Edita Food Industries vs. Xeros Technology Group
Performance |
| Timeline |
| Edita Food Industries |
| Xeros Technology |
Edita Food and Xeros Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Xeros Technology
The main advantage of trading using opposite Edita Food and Xeros Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food position performs unexpectedly, Xeros Technology 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 Xeros Technology will offset losses from the drop in Xeros Technology's long position.| Edita Food vs. Ebro Foods | Edita Food vs. Systemair AB | Edita Food vs. Molson Coors Beverage | Edita Food vs. Fevertree Drinks Plc |
| Xeros Technology vs. Taiwan Semiconductor Manufacturing | Xeros Technology vs. XLMedia PLC | Xeros Technology vs. Zinc Media Group | Xeros Technology vs. Liberty Media Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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