Correlation Between Ekopak BV and Xior Student

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

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

Diversification Opportunities for Ekopak BV and Xior Student

-0.11

Correlation Coefficient

Ekopak BV  Xior Student

Good diversification

The 3 months correlation between Ekopak and Xior is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ekopak BV and Xior Student Housing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xior Student Housing and Ekopak BV 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 Ekopak BV are associated (or correlated) with Xior Student. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xior Student Housing has no effect on the direction of Ekopak BV i.e., Ekopak BV and Xior Student go up and down completely randomly.

Pair Corralation between Ekopak BV and Xior Student

Assuming the 90 days trading horizon Ekopak BV is expected to under-perform the Xior Student. In addition to that, Ekopak BV is 1.39 times more volatile than Xior Student Housing. It trades about -0.06 of its total potential returns per unit of risk. Xior Student Housing is currently generating about -0.05 per unit of volatility. If you would invest  2,960  in Xior Student Housing on November 28, 2024 and sell it today you would lose (140.00) from holding Xior Student Housing or give up 4.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ekopak BV  vs.  Xior Student Housing

Ekopak BV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ekopak BV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Xior Student Housing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xior Student Housing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Xior Student is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ekopak BV and Xior Student

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

The idea behind Ekopak BV and Xior Student Housing 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.