Correlation Between XMX and Kusama
Can any of the company-specific risk be diversified away by investing in both XMX and Kusama 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 XMX and Kusama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XMX and Kusama, you can compare the effects of market volatilities on XMX and Kusama 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 XMX with a short position of Kusama. Check out your portfolio center. Please also check ongoing floating volatility patterns of XMX and Kusama.
Diversification Opportunities for XMX and Kusama
Good diversification
The 3 months correlation between XMX and Kusama is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding XMX and Kusama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kusama and XMX 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 XMX are associated (or correlated) with Kusama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kusama has no effect on the direction of XMX i.e., XMX and Kusama go up and down completely randomly.
Pair Corralation between XMX and Kusama
Assuming the 90 days trading horizon XMX is expected to generate 1.59 times less return on investment than Kusama. In addition to that, XMX is 1.34 times more volatile than Kusama. It trades about 0.15 of its total potential returns per unit of risk. Kusama is currently generating about 0.32 per unit of volatility. If you would invest 1,658 in Kusama on August 25, 2024 and sell it today you would earn a total of 688.00 from holding Kusama or generate 41.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XMX vs. Kusama
Performance |
| Timeline |
| XMX |
| Kusama |
XMX and Kusama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XMX and Kusama
The main advantage of trading using opposite XMX and Kusama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XMX position performs unexpectedly, Kusama 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 Kusama will offset losses from the drop in Kusama's long position.The idea behind XMX and Kusama 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.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |