Correlation Between Xtract One and Oculus VisionTech

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

By analyzing existing cross correlation between Xtract One Technologies and Oculus VisionTech, you can compare the effects of market volatilities on Xtract One and Oculus VisionTech 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 Xtract One with a short position of Oculus VisionTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtract One and Oculus VisionTech.

Diversification Opportunities for Xtract One and Oculus VisionTech

0.56

Correlation Coefficient

Xtract One  Oculus VisionTech

Very weak diversification

The 3 months correlation between Xtract and Oculus is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xtract One Technologies and Oculus VisionTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculus VisionTech and Xtract One 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 Xtract One Technologies are associated (or correlated) with Oculus VisionTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculus VisionTech has no effect on the direction of Xtract One i.e., Xtract One and Oculus VisionTech go up and down completely randomly.

Pair Corralation between Xtract One and Oculus VisionTech

Assuming the 90 days trading horizon Xtract One Technologies is expected to under-perform the Oculus VisionTech. But the stock apears to be less risky and, when comparing its historical volatility, Xtract One Technologies is 2.37 times less risky than Oculus VisionTech. The stock trades about -0.06 of its potential returns per unit of risk. The Oculus VisionTech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7.50  in Oculus VisionTech on December 30, 2024 and sell it today you would lose (1.50) from holding Oculus VisionTech or give up 20.0% of portfolio value over 90 days.

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

Xtract One Technologies  vs.  Oculus VisionTech

Xtract One Technologies

Risk-Adjusted Performance

Very Weak

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

Oculus VisionTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oculus VisionTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Oculus VisionTech is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xtract One and Oculus VisionTech

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

The idea behind Xtract One Technologies and Oculus VisionTech 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.