Correlation Between Champion Building and Xander International

Can any of the company-specific risk be diversified away by investing in both Champion Building and Xander International 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 Champion Building and Xander International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champion Building Materials and Xander International, you can compare the effects of market volatilities on Champion Building and Xander International 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 Champion Building with a short position of Xander International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Building and Xander International.

Diversification Opportunities for Champion Building and Xander International

0.27

Correlation Coefficient

Champion Building  Xander International

Modest diversification

The 3 months correlation between Champion and Xander is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Champion Building Materials and Xander International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xander International and Champion Building 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 Champion Building Materials are associated (or correlated) with Xander International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xander International has no effect on the direction of Champion Building i.e., Champion Building and Xander International go up and down completely randomly.

Pair Corralation between Champion Building and Xander International

Assuming the 90 days trading horizon Champion Building Materials is expected to under-perform the Xander International. But the stock apears to be less risky and, when comparing its historical volatility, Champion Building Materials is 2.01 times less risky than Xander International. The stock trades about -0.44 of its potential returns per unit of risk. The Xander International is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,385  in Xander International on October 24, 2024 and sell it today you would lose (75.00) from holding Xander International or give up 3.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Champion Building Materials  vs.  Xander International

Champion Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Building Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Xander International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xander International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xander International is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Champion Building and Xander International

The main advantage of trading using opposite Champion Building and Xander International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Building position performs unexpectedly, Xander International 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 Xander International will offset losses from the drop in Xander International's long position.

The idea behind Champion Building Materials and Xander International 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..