Correlation Between Aluminumof China and Xtant Medical

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

By analyzing existing cross correlation between Aluminum of and Xtant Medical Holdings, you can compare the effects of market volatilities on Aluminumof China and Xtant Medical 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 Aluminumof China with a short position of Xtant Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Xtant Medical.

Diversification Opportunities for Aluminumof China and Xtant Medical

0.59

Correlation Coefficient

Aluminumof China  Xtant Medical

Very weak diversification

The 3 months correlation between Aluminumof and Xtant is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Xtant Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtant Medical Holdings and Aluminumof China 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 Aluminum of are associated (or correlated) with Xtant Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtant Medical Holdings has no effect on the direction of Aluminumof China i.e., Aluminumof China and Xtant Medical go up and down completely randomly.

Pair Corralation between Aluminumof China and Xtant Medical

Assuming the 90 days horizon Aluminumof China is expected to generate 1.99 times less return on investment than Xtant Medical. But when comparing it to its historical volatility, Aluminum of is 1.61 times less risky than Xtant Medical. It trades about 0.2 of its potential returns per unit of risk. Xtant Medical Holdings is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Xtant Medical Holdings on October 26, 2024 and sell it today you would earn a total of  11.00  from holding Xtant Medical Holdings or generate 25.58% return on investment over 90 days.

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

Aluminum of  vs.  Xtant Medical Holdings

Aluminumof China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Xtant Medical Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xtant Medical Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Xtant Medical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aluminumof China and Xtant Medical

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

The idea behind Aluminum of and Xtant Medical Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.