Correlation Between Xsabx and Multimedia Portfolio

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

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

Diversification Opportunities for Xsabx and Multimedia Portfolio

0.67

Correlation Coefficient

Xsabx  Multimedia Portfolio

Poor diversification

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

Pair Corralation between Xsabx and Multimedia Portfolio

Assuming the 90 days horizon Xsabx is expected to generate 0.41 times more return on investment than Multimedia Portfolio. However, Xsabx is 2.45 times less risky than Multimedia Portfolio. It trades about -0.04 of its potential returns per unit of risk. Multimedia Portfolio Multimedia is currently generating about -0.07 per unit of risk. If you would invest  984.00  in Xsabx on December 24, 2024 and sell it today you would lose (12.00) from holding Xsabx or give up 1.22% of portfolio value over 90 days.

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

Xsabx  vs.  Multimedia Portfolio Multimedi

Xsabx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xsabx has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Xsabx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multimedia Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multimedia Portfolio Multimedia has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Multimedia Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xsabx and Multimedia Portfolio

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

The idea behind Xsabx and Multimedia Portfolio Multimedia 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.