Correlation Between STL Technology and Xander International

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

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

Diversification Opportunities for STL Technology and Xander International

0.09

Correlation Coefficient

STL Technology  Xander International

Significant diversification

The 3 months correlation between STL and Xander is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding STL Technology Co and Xander International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xander International and STL Technology 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 STL Technology Co 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 STL Technology i.e., STL Technology and Xander International go up and down completely randomly.

Pair Corralation between STL Technology and Xander International

Assuming the 90 days trading horizon STL Technology Co is expected to generate 1.77 times more return on investment than Xander International. However, STL Technology is 1.77 times more volatile than Xander International. It trades about 0.26 of its potential returns per unit of risk. Xander International is currently generating about -0.02 per unit of risk. If you would invest  3,580  in STL Technology Co on October 23, 2024 and sell it today you would earn a total of  3,950  from holding STL Technology Co or generate 110.34% return on investment over 90 days.

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

STL Technology Co  vs.  Xander International

STL Technology

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in STL Technology Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, STL Technology showed solid returns over the last few months and may actually be approaching a breakup point.

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with STL Technology and Xander International

The main advantage of trading using opposite STL Technology and Xander International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STL Technology 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 STL Technology Co 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.