Correlation Between Exsitec Holding and Divio Technologies

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

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

Diversification Opportunities for Exsitec Holding and Divio Technologies

0.87

Correlation Coefficient

Exsitec Holding  Divio Technologies

Very poor diversification

The 3 months correlation between Exsitec and Divio is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Exsitec Holding AB and Divio Technologies AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Divio Technologies and Exsitec 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 Exsitec Holding AB are associated (or correlated) with Divio Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Divio Technologies has no effect on the direction of Exsitec Holding i.e., Exsitec Holding and Divio Technologies go up and down completely randomly.

Pair Corralation between Exsitec Holding and Divio Technologies

Assuming the 90 days trading horizon Exsitec Holding AB is expected to generate 0.45 times more return on investment than Divio Technologies. However, Exsitec Holding AB is 2.22 times less risky than Divio Technologies. It trades about 0.01 of its potential returns per unit of risk. Divio Technologies AB is currently generating about -0.13 per unit of risk. If you would invest  13,850  in Exsitec Holding AB on September 23, 2024 and sell it today you would lose (50.00) from holding Exsitec Holding AB or give up 0.36% of portfolio value over 90 days.

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

Exsitec Holding AB  vs.  Divio Technologies AB

Exsitec Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exsitec Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Divio Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Divio Technologies AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Exsitec Holding and Divio Technologies

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

The idea behind Exsitec Holding AB and Divio Technologies AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.