Correlation Between Xchanging Solutions and Nahar Industrial

Can any of the company-specific risk be diversified away by investing in both Xchanging Solutions and Nahar Industrial 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 Nahar Industrial 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 Nahar Industrial Enterprises, you can compare the effects of market volatilities on Xchanging Solutions and Nahar Industrial 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 Nahar Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xchanging Solutions and Nahar Industrial.

Diversification Opportunities for Xchanging Solutions and Nahar Industrial

0.95

Correlation Coefficient

Xchanging Solutions  Nahar Industrial

Almost no diversification

The 3 months correlation between Xchanging and Nahar is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Xchanging Solutions Limited and Nahar Industrial Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nahar Industrial Ent 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 Nahar Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nahar Industrial Ent has no effect on the direction of Xchanging Solutions i.e., Xchanging Solutions and Nahar Industrial go up and down completely randomly.

Pair Corralation between Xchanging Solutions and Nahar Industrial

Assuming the 90 days trading horizon Xchanging Solutions Limited is expected to generate 1.01 times more return on investment than Nahar Industrial. However, Xchanging Solutions is 1.01 times more volatile than Nahar Industrial Enterprises. It trades about -0.11 of its potential returns per unit of risk. Nahar Industrial Enterprises is currently generating about -0.24 per unit of risk. If you would invest  11,095  in Xchanging Solutions Limited on December 1, 2024 and sell it today you would lose (2,009) from holding Xchanging Solutions Limited or give up 18.11% of portfolio value over 90 days.

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

Xchanging Solutions Limited  vs.  Nahar Industrial Enterprises

Xchanging Solutions

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Nahar Industrial Ent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nahar Industrial Enterprises 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Xchanging Solutions and Nahar Industrial

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

The idea behind Xchanging Solutions Limited and Nahar Industrial Enterprises 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.