Correlation Between Banxa Holdings and Xalles Holdings

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

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

Diversification Opportunities for Banxa Holdings and Xalles Holdings

-0.68

Correlation Coefficient

Banxa Holdings  Xalles Holdings

Excellent diversification

The 3 months correlation between Banxa and Xalles is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Banxa Holdings and Xalles Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xalles Holdings and Banxa Holdings 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 Banxa Holdings 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 Banxa Holdings i.e., Banxa Holdings and Xalles Holdings go up and down completely randomly.

Pair Corralation between Banxa Holdings and Xalles Holdings

Assuming the 90 days horizon Banxa Holdings is expected to generate 1.27 times more return on investment than Xalles Holdings. However, Banxa Holdings is 1.27 times more volatile than Xalles Holdings. It trades about 0.07 of its potential returns per unit of risk. Xalles Holdings is currently generating about 0.03 per unit of risk. If you would invest  25.00  in Banxa Holdings on September 12, 2024 and sell it today you would earn a total of  32.00  from holding Banxa Holdings or generate 128.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Banxa Holdings  vs.  Xalles Holdings

Banxa Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banxa Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Banxa Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

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 Banxa Holdings and Xalles Holdings

The main advantage of trading using opposite Banxa Holdings and Xalles Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banxa Holdings 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 Banxa Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.