Correlation Between Xlife Sciences and EFG International

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

By analyzing existing cross correlation between Xlife Sciences AG and EFG International AG, you can compare the effects of market volatilities on Xlife Sciences and EFG International 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 Xlife Sciences with a short position of EFG International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xlife Sciences and EFG International.

Diversification Opportunities for Xlife Sciences and EFG International

-0.67

Correlation Coefficient

Xlife Sciences  EFG International

Excellent diversification

The 3 months correlation between Xlife and EFG is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Xlife Sciences AG and EFG International AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EFG International and Xlife Sciences 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 Xlife Sciences AG are associated (or correlated) with EFG International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EFG International has no effect on the direction of Xlife Sciences i.e., Xlife Sciences and EFG International go up and down completely randomly.

Pair Corralation between Xlife Sciences and EFG International

Assuming the 90 days trading horizon Xlife Sciences AG is expected to under-perform the EFG International. In addition to that, Xlife Sciences is 3.3 times more volatile than EFG International AG. It trades about -0.01 of its total potential returns per unit of risk. EFG International AG is currently generating about 0.1 per unit of volatility. If you would invest  1,261  in EFG International AG on December 28, 2024 and sell it today you would earn a total of  99.00  from holding EFG International AG or generate 7.85% return on investment over 90 days.

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

Xlife Sciences AG  vs.  EFG International AG

Xlife Sciences AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xlife Sciences AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Xlife Sciences is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

EFG International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EFG International AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EFG International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xlife Sciences and EFG International

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

The idea behind Xlife Sciences AG and EFG International AG 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.