Correlation Between OPY Acquisition and XPDB Old

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

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

Diversification Opportunities for OPY Acquisition and XPDB Old

0.32

Correlation Coefficient

OPY Acquisition  XPDB Old

Weak diversification

The 3 months correlation between OPY and XPDB is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding OPY Acquisition I and XPDB Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPDB Old and OPY Acquisition 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 OPY Acquisition I are associated (or correlated) with XPDB Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPDB Old has no effect on the direction of OPY Acquisition i.e., OPY Acquisition and XPDB Old go up and down completely randomly.

Pair Corralation between OPY Acquisition and XPDB Old

Assuming the 90 days horizon OPY Acquisition I is expected to under-perform the XPDB Old. In addition to that, OPY Acquisition is 2.04 times more volatile than XPDB Old. It trades about -0.04 of its total potential returns per unit of risk. XPDB Old is currently generating about 0.04 per unit of volatility. If you would invest  1,017  in XPDB Old on October 27, 2024 and sell it today you would earn a total of  26.00  from holding XPDB Old or generate 2.56% return on investment over 90 days.

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

OPY Acquisition I  vs.  XPDB Old

OPY Acquisition I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPY Acquisition I has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OPY Acquisition is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

XPDB Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with OPY Acquisition and XPDB Old

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

The idea behind OPY Acquisition I and XPDB Old 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.