Correlation Between COMSovereign Holding and XL Axiata

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

By analyzing existing cross correlation between COMSovereign Holding Corp and XL Axiata Tbk, you can compare the effects of market volatilities on COMSovereign Holding and XL Axiata 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 COMSovereign Holding with a short position of XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMSovereign Holding and XL Axiata.

Diversification Opportunities for COMSovereign Holding and XL Axiata

0.1

Correlation Coefficient

COMSovereign Holding  XL Axiata

Average diversification

The 3 months correlation between COMSovereign and PTXKY is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding COMSovereign Holding Corp and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk and COMSovereign Holding 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 COMSovereign Holding Corp are associated (or correlated) with XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of COMSovereign Holding i.e., COMSovereign Holding and XL Axiata go up and down completely randomly.

Pair Corralation between COMSovereign Holding and XL Axiata

Given the investment horizon of 90 days COMSovereign Holding Corp is expected to under-perform the XL Axiata. In addition to that, COMSovereign Holding is 1.15 times more volatile than XL Axiata Tbk. It trades about -0.01 of its total potential returns per unit of risk. XL Axiata Tbk is currently generating about 0.03 per unit of volatility. If you would invest  237.00  in XL Axiata Tbk on October 5, 2024 and sell it today you would earn a total of  49.00  from holding XL Axiata Tbk or generate 20.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	20.13%
Values	Daily Returns

COMSovereign Holding Corp  vs.  XL Axiata Tbk

COMSovereign Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMSovereign Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, COMSovereign Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

XL Axiata Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XL Axiata Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward-looking signals, XL Axiata may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with COMSovereign Holding and XL Axiata

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

The idea behind COMSovereign Holding Corp and XL Axiata Tbk 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.