Correlation Between Xchanging Solutions and Zota Health

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

Diversification Opportunities for Xchanging Solutions and Zota Health

0.32

Correlation Coefficient

Xchanging Solutions  Zota Health

Weak diversification

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

Pair Corralation between Xchanging Solutions and Zota Health

Assuming the 90 days trading horizon Xchanging Solutions is expected to generate 8.16 times less return on investment than Zota Health. But when comparing it to its historical volatility, Xchanging Solutions Limited is 1.22 times less risky than Zota Health. It trades about 0.03 of its potential returns per unit of risk. Zota Health Care is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  60,075  in Zota Health Care on October 8, 2024 and sell it today you would earn a total of  20,590  from holding Zota Health Care or generate 34.27% return on investment over 90 days.

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

Xchanging Solutions Limited  vs.  Zota Health Care

Xchanging Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xchanging Solutions Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Xchanging Solutions is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Zota Health Care

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zota Health Care are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Zota Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xchanging Solutions and Zota Health

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

The idea behind Xchanging Solutions Limited and Zota Health Care 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.