Correlation Between XTL Biopharmaceutica and Avrot Industries

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

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

Diversification Opportunities for XTL Biopharmaceutica and Avrot Industries

0.03

Correlation Coefficient

XTL Biopharmaceutica  Avrot Industries

Significant diversification

The 3 months correlation between XTL and Avrot is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding XTL Biopharmaceuticals and Avrot Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avrot Industries and XTL Biopharmaceutica 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 XTL Biopharmaceuticals are associated (or correlated) with Avrot Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avrot Industries has no effect on the direction of XTL Biopharmaceutica i.e., XTL Biopharmaceutica and Avrot Industries go up and down completely randomly.

Pair Corralation between XTL Biopharmaceutica and Avrot Industries

Assuming the 90 days trading horizon XTL Biopharmaceuticals is expected to under-perform the Avrot Industries. In addition to that, XTL Biopharmaceutica is 1.18 times more volatile than Avrot Industries. It trades about -0.1 of its total potential returns per unit of risk. Avrot Industries is currently generating about 0.03 per unit of volatility. If you would invest  4,660  in Avrot Industries on November 29, 2024 and sell it today you would earn a total of  140.00  from holding Avrot Industries or generate 3.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.04%
Values	Daily Returns

XTL Biopharmaceuticals  vs.  Avrot Industries

XTL Biopharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days XTL Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Avrot Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avrot Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Avrot Industries may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with XTL Biopharmaceutica and Avrot Industries

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

The idea behind XTL Biopharmaceuticals and Avrot Industries 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.