Correlation Between American Virtual and Xalles Holdings

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

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

Diversification Opportunities for American Virtual and Xalles Holdings

0.55

Correlation Coefficient

American Virtual  Xalles Holdings

Very weak diversification

The 3 months correlation between American and Xalles is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Virtual Cloud and Xalles Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xalles Holdings and American Virtual 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 American Virtual Cloud 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 American Virtual i.e., American Virtual and Xalles Holdings go up and down completely randomly.

Pair Corralation between American Virtual and Xalles Holdings

Assuming the 90 days horizon American Virtual Cloud is expected to generate 6.55 times more return on investment than Xalles Holdings. However, American Virtual is 6.55 times more volatile than Xalles Holdings. It trades about 0.15 of its potential returns per unit of risk. Xalles Holdings is currently generating about 0.03 per unit of risk. If you would invest  8.01  in American Virtual Cloud on September 12, 2024 and sell it today you would lose (7.41) from holding American Virtual Cloud or give up 92.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	21.62%
Values	Daily Returns

American Virtual Cloud  vs.  Xalles Holdings

American Virtual Cloud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Virtual Cloud has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Virtual is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail 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 inconsistent performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with American Virtual and Xalles Holdings

The main advantage of trading using opposite American Virtual and Xalles Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Virtual 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 American Virtual Cloud 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.