Correlation Between Lifco AB and XMReality

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

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

Diversification Opportunities for Lifco AB and XMReality

0.22

Correlation Coefficient

Lifco AB  XMReality

Modest diversification

The 3 months correlation between Lifco and XMReality is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lifco AB and XMReality AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMReality AB and Lifco AB 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 Lifco AB are associated (or correlated) with XMReality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMReality AB has no effect on the direction of Lifco AB i.e., Lifco AB and XMReality go up and down completely randomly.

Pair Corralation between Lifco AB and XMReality

Assuming the 90 days trading horizon Lifco AB is expected to generate 0.2 times more return on investment than XMReality. However, Lifco AB is 5.0 times less risky than XMReality. It trades about 0.09 of its potential returns per unit of risk. XMReality AB is currently generating about -0.05 per unit of risk. If you would invest  17,154  in Lifco AB on October 9, 2024 and sell it today you would earn a total of  15,306  from holding Lifco AB or generate 89.23% return on investment over 90 days.

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

Lifco AB  vs.  XMReality AB

Lifco AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifco AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Lifco AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

XMReality AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XMReality 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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lifco AB and XMReality

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

The idea behind Lifco AB and XMReality 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.