Correlation Between Midsona AB and XMReality
Can any of the company-specific risk be diversified away by investing in both Midsona AB and XMReality 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 Midsona AB and XMReality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midsona AB and XMReality AB, you can compare the effects of market volatilities on Midsona AB and XMReality 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 Midsona AB with a short position of XMReality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midsona AB and XMReality.
Diversification Opportunities for Midsona AB and XMReality
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Midsona and XMReality is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Midsona AB and XMReality AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMReality AB and Midsona AB 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 Midsona AB are associated (or correlated) with XMReality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMReality AB has no effect on the direction of Midsona AB i.e., Midsona AB and XMReality go up and down completely randomly.
Pair Corralation between Midsona AB and XMReality
Assuming the 90 days trading horizon Midsona AB is expected to generate 1.49 times less return on investment than XMReality. But when comparing it to its historical volatility, Midsona AB is 2.09 times less risky than XMReality. It trades about 0.08 of its potential returns per unit of risk. XMReality AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.50 in XMReality AB on November 30, 2024 and sell it today you would earn a total of 0.10 from holding XMReality AB or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Midsona AB vs. XMReality AB
Performance |
| Timeline |
| Midsona AB |
| XMReality AB |
Midsona AB and XMReality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midsona AB and XMReality
The main advantage of trading using opposite Midsona AB and XMReality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midsona AB position performs unexpectedly, XMReality 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 XMReality will offset losses from the drop in XMReality's long position.The idea behind Midsona AB and XMReality AB 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.| XMReality vs. Tangiamo Touch Technology | XMReality vs. Zaplox AB | XMReality vs. Alligator Bioscience AB | XMReality vs. Garo AB |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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