Correlation Between Exail Technologies and Charwood Energy

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

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

Diversification Opportunities for Exail Technologies and Charwood Energy

0.23

Correlation Coefficient

Exail Technologies  Charwood Energy

Modest diversification

The 3 months correlation between Exail and Charwood is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Exail Technologies SA and Charwood Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charwood Energy SA and Exail 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 Exail Technologies SA are associated (or correlated) with Charwood Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charwood Energy SA has no effect on the direction of Exail Technologies i.e., Exail Technologies and Charwood Energy go up and down completely randomly.

Pair Corralation between Exail Technologies and Charwood Energy

Assuming the 90 days trading horizon Exail Technologies SA is expected to generate 0.67 times more return on investment than Charwood Energy. However, Exail Technologies SA is 1.49 times less risky than Charwood Energy. It trades about 0.06 of its potential returns per unit of risk. Charwood Energy SA is currently generating about -0.14 per unit of risk. If you would invest  1,756  in Exail Technologies SA on October 11, 2024 and sell it today you would earn a total of  120.00  from holding Exail Technologies SA or generate 6.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Exail Technologies SA  vs.  Charwood Energy SA

Exail Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exail Technologies SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Exail Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Charwood Energy SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charwood Energy SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Exail Technologies and Charwood Energy

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

The idea behind Exail Technologies SA and Charwood Energy SA 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.