Correlation Between Queens Road and Xtract One

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

By analyzing existing cross correlation between Queens Road Capital and Xtract One Technologies, you can compare the effects of market volatilities on Queens Road and Xtract One 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 Queens Road with a short position of Xtract One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Queens Road and Xtract One.

Diversification Opportunities for Queens Road and Xtract One

0.59

Correlation Coefficient

Queens Road  Xtract One

Very weak diversification

The 3 months correlation between Queens and Xtract is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Queens Road Capital and Xtract One Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtract One Technologies and Queens Road 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 Queens Road Capital are associated (or correlated) with Xtract One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtract One Technologies has no effect on the direction of Queens Road i.e., Queens Road and Xtract One go up and down completely randomly.

Pair Corralation between Queens Road and Xtract One

Assuming the 90 days trading horizon Queens Road is expected to generate 7.07 times less return on investment than Xtract One. But when comparing it to its historical volatility, Queens Road Capital is 1.57 times less risky than Xtract One. It trades about 0.04 of its potential returns per unit of risk. Xtract One Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Xtract One Technologies on October 26, 2024 and sell it today you would earn a total of  7.00  from holding Xtract One Technologies or generate 14.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Queens Road Capital  vs.  Xtract One Technologies

Queens Road Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Queens Road Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Queens Road is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Xtract One Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtract One Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Queens Road and Xtract One

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

The idea behind Queens Road Capital and Xtract One Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.