Correlation Between Xplora Technologies and Edda Wind

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

By analyzing existing cross correlation between Xplora Technologies As and Edda Wind ASA, you can compare the effects of market volatilities on Xplora Technologies and Edda Wind 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 Xplora Technologies with a short position of Edda Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xplora Technologies and Edda Wind.

Diversification Opportunities for Xplora Technologies and Edda Wind

0.13

Correlation Coefficient

Xplora Technologies  Edda Wind

Average diversification

The 3 months correlation between Xplora and Edda is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Xplora Technologies As and Edda Wind ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edda Wind ASA and Xplora Technologies 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 Xplora Technologies As are associated (or correlated) with Edda Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edda Wind ASA has no effect on the direction of Xplora Technologies i.e., Xplora Technologies and Edda Wind go up and down completely randomly.

Pair Corralation between Xplora Technologies and Edda Wind

Assuming the 90 days trading horizon Xplora Technologies As is expected to generate 1.14 times more return on investment than Edda Wind. However, Xplora Technologies is 1.14 times more volatile than Edda Wind ASA. It trades about 0.0 of its potential returns per unit of risk. Edda Wind ASA is currently generating about -0.16 per unit of risk. If you would invest  3,250  in Xplora Technologies As on December 2, 2024 and sell it today you would lose (50.00) from holding Xplora Technologies As or give up 1.54% of portfolio value over 90 days.

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

Xplora Technologies As  vs.  Edda Wind ASA

Xplora Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xplora Technologies As has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Xplora Technologies is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Edda Wind ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edda Wind ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Xplora Technologies and Edda Wind

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

The idea behind Xplora Technologies As and Edda Wind ASA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.