Correlation Between Alithya and Xalles Holdings

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

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

Diversification Opportunities for Alithya and Xalles Holdings

0.3

Correlation Coefficient

Alithya  Xalles Holdings

Weak diversification

The 3 months correlation between Alithya and Xalles is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Alithya Group and Xalles Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xalles Holdings and Alithya 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 Alithya Group are associated (or correlated) with Xalles Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xalles Holdings has no effect on the direction of Alithya i.e., Alithya and Xalles Holdings go up and down completely randomly.

Pair Corralation between Alithya and Xalles Holdings

Given the investment horizon of 90 days Alithya is expected to generate 2.16 times less return on investment than Xalles Holdings. But when comparing it to its historical volatility, Alithya Group is 4.54 times less risky than Xalles Holdings. It trades about 0.07 of its potential returns per unit of risk. Xalles Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.23  in Xalles Holdings on September 14, 2024 and sell it today you would lose (0.17) from holding Xalles Holdings or give up 73.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.09%
Values	Daily Returns

Alithya Group  vs.  Xalles Holdings

Alithya Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alithya Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alithya is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xalles Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xalles Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Xalles Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alithya and Xalles Holdings

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

The idea behind Alithya Group and Xalles 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.