Correlation Between XXL ASA and Precise Biometrics
Can any of the company-specific risk be diversified away by investing in both XXL ASA and Precise Biometrics 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 XXL ASA and Precise Biometrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL ASA and Precise Biometrics AB, you can compare the effects of market volatilities on XXL ASA and Precise Biometrics 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 XXL ASA with a short position of Precise Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL ASA and Precise Biometrics.
Diversification Opportunities for XXL ASA and Precise Biometrics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XXL and Precise is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding XXL ASA and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics and XXL ASA 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 XXL ASA are associated (or correlated) with Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of XXL ASA i.e., XXL ASA and Precise Biometrics go up and down completely randomly.
Pair Corralation between XXL ASA and Precise Biometrics
Assuming the 90 days trading horizon XXL ASA is expected to under-perform the Precise Biometrics. But the stock apears to be less risky and, when comparing its historical volatility, XXL ASA is 1.19 times less risky than Precise Biometrics. The stock trades about -0.17 of its potential returns per unit of risk. The Precise Biometrics AB is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 451.00 in Precise Biometrics AB on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Precise Biometrics AB or generate 29.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
XXL ASA vs. Precise Biometrics AB
Performance |
| Timeline |
| XXL ASA |
| Precise Biometrics |
XXL ASA and Precise Biometrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL ASA and Precise Biometrics
The main advantage of trading using opposite XXL ASA and Precise Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL ASA position performs unexpectedly, Precise Biometrics 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 Precise Biometrics will offset losses from the drop in Precise Biometrics' long position.The idea behind XXL ASA and Precise Biometrics 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.| Precise Biometrics vs. Enea AB | Precise Biometrics vs. Novotek AB | Precise Biometrics vs. Addnode Group AB | Precise Biometrics vs. Softronic 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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