Correlation Between Corby Spirit and Exco Technologies

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

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

Diversification Opportunities for Corby Spirit and Exco Technologies

-0.04

Correlation Coefficient

Corby Spirit  Exco Technologies

Good diversification

The 3 months correlation between Corby and Exco is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Corby Spirit and and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies and Corby Spirit 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 Corby Spirit and 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 Corby Spirit i.e., Corby Spirit and Exco Technologies go up and down completely randomly.

Pair Corralation between Corby Spirit and Exco Technologies

Assuming the 90 days trading horizon Corby Spirit and is expected to under-perform the Exco Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Corby Spirit and is 1.74 times less risky than Exco Technologies. The stock trades about -0.09 of its potential returns per unit of risk. The Exco Technologies Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  783.00  in Exco Technologies Limited on September 25, 2024 and sell it today you would lose (31.00) from holding Exco Technologies Limited or give up 3.96% of portfolio value over 90 days.

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

Corby Spirit and  vs.  Exco Technologies Limited

Corby Spirit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corby Spirit and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Corby Spirit is not utilizing all of its potentials. The newest 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 Corby Spirit and Exco Technologies

The main advantage of trading using opposite Corby Spirit and Exco Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corby Spirit 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 Corby Spirit and 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.