Correlation Between XOMA Corp and XOMA

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

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

Diversification Opportunities for XOMA Corp and XOMA

0.88

Correlation Coefficient

XOMA Corp  XOMA

Very poor diversification

The 3 months correlation between XOMA and XOMA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp and XOMA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA and XOMA Corp 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 XOMA Corp are associated (or correlated) with XOMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA has no effect on the direction of XOMA Corp i.e., XOMA Corp and XOMA go up and down completely randomly.

Pair Corralation between XOMA Corp and XOMA

Assuming the 90 days horizon XOMA Corp is expected to generate 2.0 times more return on investment than XOMA. However, XOMA Corp is 2.0 times more volatile than XOMA Corporation. It trades about 0.08 of its potential returns per unit of risk. XOMA Corporation is currently generating about 0.09 per unit of risk. If you would invest  2,481  in XOMA Corp on September 3, 2024 and sell it today you would earn a total of  88.00  from holding XOMA Corp or generate 3.55% return on investment over 90 days.

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

XOMA Corp  vs.  XOMA Corp.

XOMA Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, XOMA Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

XOMA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with XOMA Corp and XOMA

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

The idea behind XOMA Corp and XOMA Corporation 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.