Correlation Between Beeks Trading and Xaar Plc

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

By analyzing existing cross correlation between Beeks Trading and Xaar plc, you can compare the effects of market volatilities on Beeks Trading and Xaar Plc 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 Beeks Trading with a short position of Xaar Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beeks Trading and Xaar Plc.

Diversification Opportunities for Beeks Trading and Xaar Plc

-0.53

Correlation Coefficient

Beeks Trading  Xaar Plc

Excellent diversification

The 3 months correlation between Beeks and Xaar is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Beeks Trading and Xaar plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xaar plc and Beeks Trading 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 Beeks Trading are associated (or correlated) with Xaar Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xaar plc has no effect on the direction of Beeks Trading i.e., Beeks Trading and Xaar Plc go up and down completely randomly.

Pair Corralation between Beeks Trading and Xaar Plc

Assuming the 90 days trading horizon Beeks Trading is expected to under-perform the Xaar Plc. But the stock apears to be less risky and, when comparing its historical volatility, Beeks Trading is 2.22 times less risky than Xaar Plc. The stock trades about -0.04 of its potential returns per unit of risk. The Xaar plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,600  in Xaar plc on October 10, 2024 and sell it today you would earn a total of  300.00  from holding Xaar plc or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Beeks Trading  vs.  Xaar plc

Beeks Trading

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beeks Trading are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Beeks Trading may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xaar plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xaar plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Beeks Trading and Xaar Plc

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

The idea behind Beeks Trading and Xaar plc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.