Correlation Between Hurum and Xavis

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

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

Diversification Opportunities for Hurum and Xavis

0.95

Correlation Coefficient

Hurum  Xavis

Almost no diversification

The 3 months correlation between Hurum and Xavis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hurum Co and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis and Hurum 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 Hurum Co are associated (or correlated) with Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Hurum i.e., Hurum and Xavis go up and down completely randomly.

Pair Corralation between Hurum and Xavis

Assuming the 90 days trading horizon Hurum is expected to generate 1.13 times less return on investment than Xavis. But when comparing it to its historical volatility, Hurum Co is 1.5 times less risky than Xavis. It trades about 0.36 of its potential returns per unit of risk. Xavis Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  115,000  in Xavis Co on October 8, 2024 and sell it today you would earn a total of  18,100  from holding Xavis Co or generate 15.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Hurum Co  vs.  Xavis Co

Hurum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hurum Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with Hurum and Xavis

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

The idea behind Hurum Co and Xavis 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.