Correlation Between Essensys PLC and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Essensys PLC and XLMedia 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 Essensys PLC and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essensys PLC and XLMedia PLC, you can compare the effects of market volatilities on Essensys PLC and XLMedia 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 Essensys PLC with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essensys PLC and XLMedia PLC.
Diversification Opportunities for Essensys PLC and XLMedia PLC
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Essensys and XLMedia is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Essensys PLC and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Essensys PLC 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 Essensys PLC are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Essensys PLC i.e., Essensys PLC and XLMedia PLC go up and down completely randomly.
Pair Corralation between Essensys PLC and XLMedia PLC
Assuming the 90 days trading horizon Essensys PLC is expected to generate 0.99 times more return on investment than XLMedia PLC. However, Essensys PLC is 1.01 times less risky than XLMedia PLC. It trades about 0.07 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.02 per unit of risk. If you would invest 2,600 in Essensys PLC on September 2, 2024 and sell it today you would earn a total of 600.00 from holding Essensys PLC or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essensys PLC vs. XLMedia PLC
Performance |
| Timeline |
| Essensys PLC |
| XLMedia PLC |
Essensys PLC and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essensys PLC and XLMedia PLC
The main advantage of trading using opposite Essensys PLC and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essensys PLC position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Essensys PLC vs. SupplyMe Capital PLC | Essensys PLC vs. Lloyds Banking Group | Essensys PLC vs. Premier African Minerals | Essensys PLC vs. SANTANDER UK 8 |
| XLMedia PLC vs. Premier Foods PLC | XLMedia PLC vs. Endeavour Mining Corp | XLMedia PLC vs. Associated British Foods | XLMedia PLC vs. Bisichi Mining PLC |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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