Correlation Between Actron Technology and Xxentria Technology

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

By analyzing existing cross correlation between Actron Technology and Xxentria Technology Materials, you can compare the effects of market volatilities on Actron Technology and Xxentria Technology 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 Actron Technology with a short position of Xxentria Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Actron Technology and Xxentria Technology.

Diversification Opportunities for Actron Technology and Xxentria Technology

0.78

Correlation Coefficient

Actron Technology  Xxentria Technology

Poor diversification

The 3 months correlation between Actron and Xxentria is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Actron Technology and Xxentria Technology Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xxentria Technology and Actron Technology 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 Actron Technology are associated (or correlated) with Xxentria Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xxentria Technology has no effect on the direction of Actron Technology i.e., Actron Technology and Xxentria Technology go up and down completely randomly.

Pair Corralation between Actron Technology and Xxentria Technology

Assuming the 90 days trading horizon Actron Technology is expected to under-perform the Xxentria Technology. In addition to that, Actron Technology is 2.09 times more volatile than Xxentria Technology Materials. It trades about -0.13 of its total potential returns per unit of risk. Xxentria Technology Materials is currently generating about -0.13 per unit of volatility. If you would invest  6,385  in Xxentria Technology Materials on September 25, 2024 and sell it today you would lose (1,035) from holding Xxentria Technology Materials or give up 16.21% of portfolio value over 90 days.

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

Actron Technology  vs.  Xxentria Technology Materials

Actron Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Actron Technology 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Xxentria Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xxentria Technology Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Actron Technology and Xxentria Technology

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

The idea behind Actron Technology and Xxentria Technology Materials 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.