Correlation Between Exro Technologies and Ilika Plc

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

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

Diversification Opportunities for Exro Technologies and Ilika Plc

0.65

Correlation Coefficient

Exro Technologies  Ilika Plc

Poor diversification

The 3 months correlation between Exro and Ilika is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Exro Technologies and Ilika plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilika plc and Exro 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 Exro Technologies are associated (or correlated) with Ilika Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilika plc has no effect on the direction of Exro Technologies i.e., Exro Technologies and Ilika Plc go up and down completely randomly.

Pair Corralation between Exro Technologies and Ilika Plc

Assuming the 90 days horizon Exro Technologies is expected to under-perform the Ilika Plc. In addition to that, Exro Technologies is 2.02 times more volatile than Ilika plc. It trades about -0.1 of its total potential returns per unit of risk. Ilika plc is currently generating about -0.02 per unit of volatility. If you would invest  31.00  in Ilika plc on September 2, 2024 and sell it today you would lose (4.00) from holding Ilika plc or give up 12.9% of portfolio value over 90 days.

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

Exro Technologies  vs.  Ilika plc

Exro Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exro Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ilika plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ilika plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Ilika Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Exro Technologies and Ilika Plc

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

The idea behind Exro Technologies and Ilika plc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.