Correlation Between Text SA and E Xim
Can any of the company-specific risk be diversified away by investing in both Text SA and E Xim 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 Text SA and E Xim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Text SA and E Xim IT, you can compare the effects of market volatilities on Text SA and E Xim 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 Text SA with a short position of E Xim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Text SA and E Xim.
Diversification Opportunities for Text SA and E Xim
Excellent diversification
The 3 months correlation between Text and EXM is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Text SA and E Xim IT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Xim IT and Text SA 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 Text SA are associated (or correlated) with E Xim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Xim IT has no effect on the direction of Text SA i.e., Text SA and E Xim go up and down completely randomly.
Pair Corralation between Text SA and E Xim
Assuming the 90 days trading horizon Text SA is expected to under-perform the E Xim. But the stock apears to be less risky and, when comparing its historical volatility, Text SA is 4.77 times less risky than E Xim. The stock trades about -0.04 of its potential returns per unit of risk. The E Xim IT is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,050 in E Xim IT on August 26, 2024 and sell it today you would earn a total of 10,450 from holding E Xim IT or generate 172.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 36.19% |
| Values | Daily Returns |
Text SA vs. E Xim IT
Performance |
| Timeline |
| Text SA |
| E Xim IT |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Text SA and E Xim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Text SA and E Xim
The main advantage of trading using opposite Text SA and E Xim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Text SA position performs unexpectedly, E Xim 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 E Xim will offset losses from the drop in E Xim's long position.| Text SA vs. Banco Santander SA | Text SA vs. UniCredit SpA | Text SA vs. CEZ as | Text SA vs. Polski Koncern Naftowy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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