Correlation Between XMReality and SECITS Holding

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

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

Diversification Opportunities for XMReality and SECITS Holding

0.56

Correlation Coefficient

XMReality  SECITS Holding

Very weak diversification

The 3 months correlation between XMReality and SECITS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding XMReality AB and SECITS Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SECITS Holding AB and XMReality 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 XMReality AB are associated (or correlated) with SECITS Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SECITS Holding AB has no effect on the direction of XMReality i.e., XMReality and SECITS Holding go up and down completely randomly.

Pair Corralation between XMReality and SECITS Holding

Assuming the 90 days trading horizon XMReality AB is expected to under-perform the SECITS Holding. But the stock apears to be less risky and, when comparing its historical volatility, XMReality AB is 1.16 times less risky than SECITS Holding. The stock trades about -0.01 of its potential returns per unit of risk. The SECITS Holding AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.86  in SECITS Holding AB on September 4, 2024 and sell it today you would lose (0.86) from holding SECITS Holding AB or give up 30.07% of portfolio value over 90 days.

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

XMReality AB  vs.  SECITS Holding AB

XMReality AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

SECITS Holding AB

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days SECITS Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, SECITS Holding may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with XMReality and SECITS Holding

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

The idea behind XMReality AB and SECITS Holding AB 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.