Correlation Between Andrew Peller and Exco Technologies

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

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

Diversification Opportunities for Andrew Peller and Exco Technologies

0.1

Correlation Coefficient

Andrew Peller  Exco Technologies

Average diversification

The 3 months correlation between Andrew and Exco is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Andrew Peller Limited and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies and Andrew Peller 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 Andrew Peller Limited are associated (or correlated) with Exco Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exco Technologies has no effect on the direction of Andrew Peller i.e., Andrew Peller and Exco Technologies go up and down completely randomly.

Pair Corralation between Andrew Peller and Exco Technologies

Assuming the 90 days trading horizon Andrew Peller Limited is expected to generate 1.0 times more return on investment than Exco Technologies. However, Andrew Peller Limited is 1.0 times less risky than Exco Technologies. It trades about 0.03 of its potential returns per unit of risk. Exco Technologies Limited is currently generating about -0.44 per unit of risk. If you would invest  400.00  in Andrew Peller Limited on September 25, 2024 and sell it today you would earn a total of  3.00  from holding Andrew Peller Limited or generate 0.75% return on investment over 90 days.

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

Andrew Peller Limited  vs.  Exco Technologies Limited

Andrew Peller Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Andrew Peller Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Andrew Peller is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Exco Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exco Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Exco Technologies is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Andrew Peller and Exco Technologies

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

The idea behind Andrew Peller Limited and Exco Technologies Limited 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.