Correlation Between Xilam Animation and Sidetrade

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

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

Diversification Opportunities for Xilam Animation and Sidetrade

-0.31

Correlation Coefficient

Xilam Animation  Sidetrade

Very good diversification

The 3 months correlation between Xilam and Sidetrade is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xilam Animation and Sidetrade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidetrade and Xilam Animation 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 Xilam Animation are associated (or correlated) with Sidetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidetrade has no effect on the direction of Xilam Animation i.e., Xilam Animation and Sidetrade go up and down completely randomly.

Pair Corralation between Xilam Animation and Sidetrade

Assuming the 90 days trading horizon Xilam Animation is expected to under-perform the Sidetrade. But the stock apears to be less risky and, when comparing its historical volatility, Xilam Animation is 1.03 times less risky than Sidetrade. The stock trades about -0.06 of its potential returns per unit of risk. The Sidetrade is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20,600  in Sidetrade on September 3, 2024 and sell it today you would earn a total of  1,800  from holding Sidetrade or generate 8.74% return on investment over 90 days.

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

Xilam Animation  vs.  Sidetrade

Xilam Animation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xilam Animation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sidetrade

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sidetrade are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sidetrade may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xilam Animation and Sidetrade

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

The idea behind Xilam Animation and Sidetrade 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.