Correlation Between Xander International and MetaTech

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

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

Diversification Opportunities for Xander International and MetaTech

0.08

Correlation Coefficient

Xander International  MetaTech

Significant diversification

The 3 months correlation between Xander and MetaTech is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Xander International and MetaTech AP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaTech AP and Xander International 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 Xander International are associated (or correlated) with MetaTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaTech AP has no effect on the direction of Xander International i.e., Xander International and MetaTech go up and down completely randomly.

Pair Corralation between Xander International and MetaTech

Assuming the 90 days trading horizon Xander International is expected to under-perform the MetaTech. In addition to that, Xander International is 1.05 times more volatile than MetaTech AP. It trades about -0.03 of its total potential returns per unit of risk. MetaTech AP is currently generating about 0.03 per unit of volatility. If you would invest  4,000  in MetaTech AP on September 26, 2024 and sell it today you would earn a total of  1,000.00  from holding MetaTech AP or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Xander International  vs.  MetaTech AP

Xander International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xander International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xander International showed solid returns over the last few months and may actually be approaching a breakup point.

MetaTech AP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MetaTech AP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, MetaTech 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 Xander International and MetaTech

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

The idea behind Xander International and MetaTech AP 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.