Correlation Between XLMedia PLC and First

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

By analyzing existing cross correlation between XLMedia PLC and First Class Metals, you can compare the effects of market volatilities on XLMedia PLC and First 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 XLMedia PLC with a short position of First. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and First.

Diversification Opportunities for XLMedia PLC and First

0.51

Correlation Coefficient

XLMedia PLC  First

Very weak diversification

The 3 months correlation between XLMedia and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and First go up and down completely randomly.

Pair Corralation between XLMedia PLC and First

Assuming the 90 days trading horizon XLMedia PLC is expected to under-perform the First. But the stock apears to be less risky and, when comparing its historical volatility, XLMedia PLC is 1.29 times less risky than First. The stock trades about -0.16 of its potential returns per unit of risk. The First Class Metals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  200.00  in First Class Metals on October 9, 2024 and sell it today you would lose (20.00) from holding First Class Metals or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

XLMedia PLC  vs.  First Class Metals

XLMedia PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

First Class Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Class Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with XLMedia PLC and First

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

The idea behind XLMedia PLC and First Class Metals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.