Correlation Between Exco Technologies and Champion Bear

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

By analyzing existing cross correlation between Exco Technologies Limited and Champion Bear Resources, you can compare the effects of market volatilities on Exco Technologies and Champion Bear 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 Exco Technologies with a short position of Champion Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exco Technologies and Champion Bear.

Diversification Opportunities for Exco Technologies and Champion Bear

0.16

Correlation Coefficient

Exco Technologies  Champion Bear

Average diversification

The 3 months correlation between Exco and Champion is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Champion Bear Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Bear Resources and Exco 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 Exco Technologies Limited are associated (or correlated) with Champion Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Bear Resources has no effect on the direction of Exco Technologies i.e., Exco Technologies and Champion Bear go up and down completely randomly.

Pair Corralation between Exco Technologies and Champion Bear

Assuming the 90 days trading horizon Exco Technologies Limited is expected to under-perform the Champion Bear. But the stock apears to be less risky and, when comparing its historical volatility, Exco Technologies Limited is 14.2 times less risky than Champion Bear. The stock trades about -0.25 of its potential returns per unit of risk. The Champion Bear Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.50  in Champion Bear Resources on December 28, 2024 and sell it today you would earn a total of  1.50  from holding Champion Bear Resources or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Exco Technologies Limited  vs.  Champion Bear Resources

Exco Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exco Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental 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.

Champion Bear Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Champion Bear Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Champion Bear showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exco Technologies and Champion Bear

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

The idea behind Exco Technologies Limited and Champion Bear Resources 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.