Correlation Between XTL Biopharmaceutica and Electra

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

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

Diversification Opportunities for XTL Biopharmaceutica and Electra

0.14

Correlation Coefficient

XTL Biopharmaceutica  Electra

Average diversification

The 3 months correlation between XTL and Electra is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding XTL Biopharmaceuticals and Electra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra 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 Electra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra has no effect on the direction of XTL Biopharmaceutica i.e., XTL Biopharmaceutica and Electra go up and down completely randomly.

Pair Corralation between XTL Biopharmaceutica and Electra

Assuming the 90 days trading horizon XTL Biopharmaceuticals is expected to under-perform the Electra. In addition to that, XTL Biopharmaceutica is 1.7 times more volatile than Electra. It trades about -0.2 of its total potential returns per unit of risk. Electra is currently generating about -0.11 per unit of volatility. If you would invest  20,190,000  in Electra on December 30, 2024 and sell it today you would lose (2,553,000) from holding Electra or give up 12.64% of portfolio value over 90 days.

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

XTL Biopharmaceuticals  vs.  Electra

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Electra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electra 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with XTL Biopharmaceutica and Electra

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

The idea behind XTL Biopharmaceuticals and Electra 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.