Correlation Between London Security and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and XLMedia PLC, you can compare the effects of market volatilities on London Security 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 London Security with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and XLMedia PLC.
Diversification Opportunities for London Security and XLMedia PLC
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between London and XLMedia is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding London Security Plc and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and London Security 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 London Security 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 London Security i.e., London Security and XLMedia PLC go up and down completely randomly.
Pair Corralation between London Security and XLMedia PLC
Assuming the 90 days trading horizon London Security Plc is expected to under-perform the XLMedia PLC. In addition to that, London Security is 1.52 times more volatile than XLMedia PLC. It trades about -0.21 of its total potential returns per unit of risk. XLMedia PLC is currently generating about 0.01 per unit of volatility. If you would invest 1,190 in XLMedia PLC on September 1, 2024 and sell it today you would earn a total of 0.00 from holding XLMedia PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
London Security Plc vs. XLMedia PLC
Performance |
| Timeline |
| London Security Plc |
| XLMedia PLC |
London Security and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and XLMedia PLC
The main advantage of trading using opposite London Security and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Samsung Electronics Co | London Security vs. Samsung Electronics Co | London Security vs. Hyundai Motor | London Security vs. Toyota Motor Corp |
| XLMedia PLC vs. Uniper SE | XLMedia PLC vs. Mulberry Group PLC | XLMedia PLC vs. London Security Plc | XLMedia PLC vs. Triad Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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