Correlation Between Exco Technologies and Sirona Biochem
Can any of the company-specific risk be diversified away by investing in both Exco Technologies and Sirona Biochem 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 Exco Technologies and Sirona Biochem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exco Technologies Limited and Sirona Biochem Corp, you can compare the effects of market volatilities on Exco Technologies and Sirona Biochem 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 Exco Technologies with a short position of Sirona Biochem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exco Technologies and Sirona Biochem.
Diversification Opportunities for Exco Technologies and Sirona Biochem
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Exco and Sirona is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Sirona Biochem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirona Biochem Corp and Exco Technologies 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 Exco Technologies Limited are associated (or correlated) with Sirona Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirona Biochem Corp has no effect on the direction of Exco Technologies i.e., Exco Technologies and Sirona Biochem go up and down completely randomly.
Pair Corralation between Exco Technologies and Sirona Biochem
Assuming the 90 days trading horizon Exco Technologies Limited is expected to under-perform the Sirona Biochem. But the stock apears to be less risky and, when comparing its historical volatility, Exco Technologies Limited is 5.31 times less risky than Sirona Biochem. The stock trades about -0.07 of its potential returns per unit of risk. The Sirona Biochem Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6.50 in Sirona Biochem Corp on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Sirona Biochem Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Exco Technologies Limited vs. Sirona Biochem Corp
Performance |
| Timeline |
| Exco Technologies |
| Sirona Biochem Corp |
Exco Technologies and Sirona Biochem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exco Technologies and Sirona Biochem
The main advantage of trading using opposite Exco Technologies and Sirona Biochem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exco Technologies position performs unexpectedly, Sirona Biochem 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 Sirona Biochem will offset losses from the drop in Sirona Biochem's long position.| Exco Technologies vs. Transcontinental | Exco Technologies vs. Methanex | Exco Technologies vs. Stella Jones | Exco Technologies vs. High Liner Foods |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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