Correlation Between Xchanging Solutions and Aptech

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

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

Diversification Opportunities for Xchanging Solutions and Aptech

0.83

Correlation Coefficient

Xchanging Solutions  Aptech

Very poor diversification

The 3 months correlation between Xchanging and Aptech is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Xchanging Solutions Limited and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited and Xchanging Solutions 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 Xchanging Solutions Limited are associated (or correlated) with Aptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptech Limited has no effect on the direction of Xchanging Solutions i.e., Xchanging Solutions and Aptech go up and down completely randomly.

Pair Corralation between Xchanging Solutions and Aptech

Assuming the 90 days trading horizon Xchanging Solutions Limited is expected to generate 1.05 times more return on investment than Aptech. However, Xchanging Solutions is 1.05 times more volatile than Aptech Limited. It trades about 0.03 of its potential returns per unit of risk. Aptech Limited is currently generating about -0.04 per unit of risk. If you would invest  9,675  in Xchanging Solutions Limited on September 25, 2024 and sell it today you would earn a total of  1,134  from holding Xchanging Solutions Limited or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.59%
Values	Daily Returns

Xchanging Solutions Limited  vs.  Aptech Limited

Xchanging Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xchanging Solutions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Xchanging Solutions and Aptech

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

The idea behind Xchanging Solutions Limited and Aptech Limited 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.