Correlation Between Aerodrome and XTL Biopharmaceutica

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

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

Diversification Opportunities for Aerodrome and XTL Biopharmaceutica

-0.75

Correlation Coefficient

Aerodrome  XTL Biopharmaceutica

Pay attention - limited upside

The 3 months correlation between Aerodrome and XTL is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aerodrome Group and XTL Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTL Biopharmaceuticals and Aerodrome 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 Aerodrome Group are associated (or correlated) with XTL Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTL Biopharmaceuticals has no effect on the direction of Aerodrome i.e., Aerodrome and XTL Biopharmaceutica go up and down completely randomly.

Pair Corralation between Aerodrome and XTL Biopharmaceutica

Assuming the 90 days trading horizon Aerodrome Group is expected to under-perform the XTL Biopharmaceutica. In addition to that, Aerodrome is 1.07 times more volatile than XTL Biopharmaceuticals. It trades about -0.21 of its total potential returns per unit of risk. XTL Biopharmaceuticals is currently generating about -0.13 per unit of volatility. If you would invest  660.00  in XTL Biopharmaceuticals on September 26, 2024 and sell it today you would lose (70.00) from holding XTL Biopharmaceuticals or give up 10.61% of portfolio value over 90 days.

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

Aerodrome Group  vs.  XTL Biopharmaceuticals

Aerodrome Group

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aerodrome Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aerodrome sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Aerodrome and XTL Biopharmaceutica

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

The idea behind Aerodrome Group and XTL Biopharmaceuticals 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.