Correlation Between Xavis and Simmtech Holdings

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

By analyzing existing cross correlation between Xavis Co and Simmtech Holdings Co, you can compare the effects of market volatilities on Xavis and Simmtech Holdings 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 Xavis with a short position of Simmtech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and Simmtech Holdings.

Diversification Opportunities for Xavis and Simmtech Holdings

0.97

Correlation Coefficient

Xavis  Simmtech Holdings

Almost no diversification

The 3 months correlation between Xavis and Simmtech is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and Simmtech Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmtech Holdings and Xavis 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 Xavis Co are associated (or correlated) with Simmtech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmtech Holdings has no effect on the direction of Xavis i.e., Xavis and Simmtech Holdings go up and down completely randomly.

Pair Corralation between Xavis and Simmtech Holdings

Assuming the 90 days trading horizon Xavis is expected to generate 2.8 times less return on investment than Simmtech Holdings. But when comparing it to its historical volatility, Xavis Co is 1.12 times less risky than Simmtech Holdings. It trades about 0.17 of its potential returns per unit of risk. Simmtech Holdings Co is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  98,000  in Simmtech Holdings Co on October 11, 2024 and sell it today you would earn a total of  22,000  from holding Simmtech Holdings Co or generate 22.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.0%
Values	Daily Returns

Xavis Co  vs.  Simmtech Holdings Co

Xavis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xavis Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Simmtech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simmtech Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Xavis and Simmtech Holdings

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

The idea behind Xavis Co and Simmtech Holdings Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.