Correlation Between XLMedia PLC and Mühlbauer Holding

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

By analyzing existing cross correlation between XLMedia PLC and Mhlbauer Holding AG, you can compare the effects of market volatilities on XLMedia PLC and Mühlbauer Holding 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 XLMedia PLC with a short position of Mühlbauer Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Mühlbauer Holding.

Diversification Opportunities for XLMedia PLC and Mühlbauer Holding

-0.31

Correlation Coefficient

XLMedia PLC  Mühlbauer Holding

Very good diversification

The 3 months correlation between XLMedia and Mühlbauer is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mühlbauer Holding and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Mühlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mühlbauer Holding has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Mühlbauer Holding go up and down completely randomly.

Pair Corralation between XLMedia PLC and Mühlbauer Holding

Assuming the 90 days horizon XLMedia PLC is expected to under-perform the Mühlbauer Holding. In addition to that, XLMedia PLC is 5.68 times more volatile than Mhlbauer Holding AG. It trades about -0.05 of its total potential returns per unit of risk. Mhlbauer Holding AG is currently generating about 0.27 per unit of volatility. If you would invest  3,540  in Mhlbauer Holding AG on October 22, 2024 and sell it today you would earn a total of  500.00  from holding Mhlbauer Holding AG or generate 14.12% return on investment over 90 days.

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

XLMedia PLC  vs.  Mhlbauer Holding AG

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mühlbauer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mhlbauer Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with XLMedia PLC and Mühlbauer Holding

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

The idea behind XLMedia PLC and Mhlbauer Holding AG 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.