Correlation Between Carebook Technologies and Xtract One

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

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

Diversification Opportunities for Carebook Technologies and Xtract One

0.5

Correlation Coefficient

Carebook Technologies  Xtract One

Very weak diversification

The 3 months correlation between Carebook and Xtract is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Carebook Technologies and Xtract One Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtract One Technologies and Carebook Technologies 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 Carebook Technologies are associated (or correlated) with Xtract One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtract One Technologies has no effect on the direction of Carebook Technologies i.e., Carebook Technologies and Xtract One go up and down completely randomly.

Pair Corralation between Carebook Technologies and Xtract One

Assuming the 90 days trading horizon Carebook Technologies is expected to generate 3.47 times more return on investment than Xtract One. However, Carebook Technologies is 3.47 times more volatile than Xtract One Technologies. It trades about 0.08 of its potential returns per unit of risk. Xtract One Technologies is currently generating about -0.07 per unit of risk. If you would invest  7.50  in Carebook Technologies on October 10, 2024 and sell it today you would earn a total of  2.00  from holding Carebook Technologies or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Carebook Technologies  vs.  Xtract One Technologies

Carebook Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carebook Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Carebook Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Xtract One Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtract One Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Carebook Technologies and Xtract One

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

The idea behind Carebook Technologies and Xtract One Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..