Correlation Between XTL Biopharmaceutica and Orbit Technologies

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

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

Diversification Opportunities for XTL Biopharmaceutica and Orbit Technologies

-0.47

Correlation Coefficient

XTL Biopharmaceutica  Orbit Technologies

Very good diversification

The 3 months correlation between XTL and Orbit is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding XTL Biopharmaceuticals and Orbit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Technologies 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 Orbit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Technologies has no effect on the direction of XTL Biopharmaceutica i.e., XTL Biopharmaceutica and Orbit Technologies go up and down completely randomly.

Pair Corralation between XTL Biopharmaceutica and Orbit Technologies

Assuming the 90 days trading horizon XTL Biopharmaceuticals is expected to under-perform the Orbit Technologies. In addition to that, XTL Biopharmaceutica is 2.29 times more volatile than Orbit Technologies. It trades about -0.1 of its total potential returns per unit of risk. Orbit Technologies is currently generating about 0.17 per unit of volatility. If you would invest  269,170  in Orbit Technologies on November 29, 2024 and sell it today you would earn a total of  39,330  from holding Orbit Technologies or generate 14.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

XTL Biopharmaceuticals  vs.  Orbit Technologies

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.

Orbit Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbit Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XTL Biopharmaceutica and Orbit Technologies

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

The idea behind XTL Biopharmaceuticals and Orbit Technologies 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.