Correlation Between Xavis and SFA Engineering

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

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

Diversification Opportunities for Xavis and SFA Engineering

0.0

Correlation Coefficient

Xavis  SFA Engineering

Pay attention - limited upside

The 3 months correlation between Xavis and SFA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering 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 SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of Xavis i.e., Xavis and SFA Engineering go up and down completely randomly.

Pair Corralation between Xavis and SFA Engineering

If you would invest (100.00) in Xavis Co on November 20, 2024 and sell it today you would earn a total of  100.00  from holding Xavis Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Xavis Co  vs.  SFA Engineering

Xavis

Risk-Adjusted Performance

Modest

Over the last 90 days Xavis Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xavis is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SFA Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFA Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SFA Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xavis and SFA Engineering

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

The idea behind Xavis Co and SFA Engineering 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .