Correlation Between FORMPIPE SOFTWARE and Xenia Hotels

Can any of the company-specific risk be diversified away by investing in both FORMPIPE SOFTWARE and Xenia Hotels 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 FORMPIPE SOFTWARE and Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FORMPIPE SOFTWARE AB and Xenia Hotels Resorts, you can compare the effects of market volatilities on FORMPIPE SOFTWARE and Xenia Hotels 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 FORMPIPE SOFTWARE with a short position of Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and Xenia Hotels.

Diversification Opportunities for FORMPIPE SOFTWARE and Xenia Hotels

0.58

Correlation Coefficient

FORMPIPE SOFTWARE  Xenia Hotels

Very weak diversification

The 3 months correlation between FORMPIPE and Xenia is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB are associated (or correlated) with Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and Xenia Hotels go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and Xenia Hotels

Assuming the 90 days horizon FORMPIPE SOFTWARE is expected to generate 1.28 times less return on investment than Xenia Hotels. In addition to that, FORMPIPE SOFTWARE is 1.16 times more volatile than Xenia Hotels Resorts. It trades about 0.04 of its total potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.05 per unit of volatility. If you would invest  1,148  in Xenia Hotels Resorts on October 9, 2024 and sell it today you would earn a total of  272.00  from holding Xenia Hotels Resorts or generate 23.69% return on investment over 90 days.

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

FORMPIPE SOFTWARE AB  vs.  Xenia Hotels Resorts

FORMPIPE SOFTWARE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FORMPIPE SOFTWARE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Xenia Hotels Resorts

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xenia Hotels Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Xenia Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FORMPIPE SOFTWARE and Xenia Hotels

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

The idea behind FORMPIPE SOFTWARE AB and Xenia Hotels Resorts 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.