Correlation Between Exxaro Tiles and Uniinfo Telecom

Can any of the company-specific risk be diversified away by investing in both Exxaro Tiles and Uniinfo Telecom 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 Exxaro Tiles and Uniinfo Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exxaro Tiles Limited and Uniinfo Telecom Services, you can compare the effects of market volatilities on Exxaro Tiles and Uniinfo Telecom 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 Exxaro Tiles with a short position of Uniinfo Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxaro Tiles and Uniinfo Telecom.

Diversification Opportunities for Exxaro Tiles and Uniinfo Telecom

-0.24

Correlation Coefficient

Exxaro Tiles  Uniinfo Telecom

Very good diversification

The 3 months correlation between Exxaro and Uniinfo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Exxaro Tiles Limited and Uniinfo Telecom Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniinfo Telecom Services and Exxaro Tiles 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 Exxaro Tiles Limited are associated (or correlated) with Uniinfo Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniinfo Telecom Services has no effect on the direction of Exxaro Tiles i.e., Exxaro Tiles and Uniinfo Telecom go up and down completely randomly.

Pair Corralation between Exxaro Tiles and Uniinfo Telecom

Assuming the 90 days trading horizon Exxaro Tiles Limited is expected to generate 35.45 times more return on investment than Uniinfo Telecom. However, Exxaro Tiles is 35.45 times more volatile than Uniinfo Telecom Services. It trades about 0.14 of its potential returns per unit of risk. Uniinfo Telecom Services is currently generating about 0.04 per unit of risk. If you would invest  844.00  in Exxaro Tiles Limited on September 24, 2024 and sell it today you would earn a total of  36.00  from holding Exxaro Tiles Limited or generate 4.27% return on investment over 90 days.

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

Exxaro Tiles Limited  vs.  Uniinfo Telecom Services

Exxaro Tiles Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxaro Tiles Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Exxaro Tiles sustained solid returns over the last few months and may actually be approaching a breakup point.

Uniinfo Telecom Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Uniinfo Telecom Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Uniinfo Telecom is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exxaro Tiles and Uniinfo Telecom

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

The idea behind Exxaro Tiles Limited and Uniinfo Telecom Services 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.