Correlation Between XTL Biopharmaceutica and Spring Ventures

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

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

Diversification Opportunities for XTL Biopharmaceutica and Spring Ventures

0.88

Correlation Coefficient

XTL Biopharmaceutica  Spring Ventures

Very poor diversification

The 3 months correlation between XTL and Spring is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding XTL Biopharmaceuticals and Spring Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Ventures 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 Spring Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Ventures has no effect on the direction of XTL Biopharmaceutica i.e., XTL Biopharmaceutica and Spring Ventures go up and down completely randomly.

Pair Corralation between XTL Biopharmaceutica and Spring Ventures

Assuming the 90 days trading horizon XTL Biopharmaceuticals is expected to under-perform the Spring Ventures. In addition to that, XTL Biopharmaceutica is 1.64 times more volatile than Spring Ventures. It trades about -0.13 of its total potential returns per unit of risk. Spring Ventures is currently generating about -0.12 per unit of volatility. If you would invest  73,420  in Spring Ventures on September 3, 2024 and sell it today you would lose (14,630) from holding Spring Ventures or give up 19.93% of portfolio value over 90 days.

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

XTL Biopharmaceuticals  vs.  Spring Ventures

XTL Biopharmaceuticals

Risk-Adjusted Performance

0 of 100

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

Spring Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with XTL Biopharmaceutica and Spring Ventures

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

The idea behind XTL Biopharmaceuticals and Spring Ventures 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.