Correlation Between Xavis and Puloon Technology

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

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

Diversification Opportunities for Xavis and Puloon Technology

0.61

Correlation Coefficient

Xavis  Puloon Technology

Poor diversification

The 3 months correlation between Xavis and Puloon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon Technology and Xavis 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 Xavis Co are associated (or correlated) with Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of Xavis i.e., Xavis and Puloon Technology go up and down completely randomly.

Pair Corralation between Xavis and Puloon Technology

Assuming the 90 days trading horizon Xavis Co is expected to under-perform the Puloon Technology. But the stock apears to be less risky and, when comparing its historical volatility, Xavis Co is 1.37 times less risky than Puloon Technology. The stock trades about -0.33 of its potential returns per unit of risk. The Puloon Technology is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  663,000  in Puloon Technology on August 31, 2024 and sell it today you would earn a total of  25,000  from holding Puloon Technology or generate 3.77% return on investment over 90 days.

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

Xavis Co  vs.  Puloon Technology

Xavis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xavis Co 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Puloon Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Puloon Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Puloon Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Xavis and Puloon Technology

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

The idea behind Xavis Co and Puloon Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.