Correlation Between Visium Technologies and XTM

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

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

Diversification Opportunities for Visium Technologies and XTM

-0.11

Correlation Coefficient

Visium Technologies  XTM

Good diversification

The 3 months correlation between Visium and XTM is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Visium Technologies and XTM Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTM Inc and Visium Technologies 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 Visium Technologies are associated (or correlated) with XTM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTM Inc has no effect on the direction of Visium Technologies i.e., Visium Technologies and XTM go up and down completely randomly.

Pair Corralation between Visium Technologies and XTM

Given the investment horizon of 90 days Visium Technologies is expected to generate 1.43 times more return on investment than XTM. However, Visium Technologies is 1.43 times more volatile than XTM Inc. It trades about -0.1 of its potential returns per unit of risk. XTM Inc is currently generating about -0.2 per unit of risk. If you would invest  0.21  in Visium Technologies on December 4, 2024 and sell it today you would lose (0.07) from holding Visium Technologies or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Visium Technologies  vs.  XTM Inc

Visium Technologies

Risk-Adjusted Performance

Weak

Over the last 90 days Visium Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

XTM Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days XTM Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Visium Technologies and XTM

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

The idea behind Visium Technologies and XTM Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.