Correlation Between XLMedia PLC and GSTechnologies

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

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

Diversification Opportunities for XLMedia PLC and GSTechnologies

0.43

Correlation Coefficient

XLMedia PLC  GSTechnologies

Very weak diversification

The 3 months correlation between XLMedia and GSTechnologies is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and GSTechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSTechnologies and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with GSTechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSTechnologies has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and GSTechnologies go up and down completely randomly.

Pair Corralation between XLMedia PLC and GSTechnologies

Assuming the 90 days trading horizon XLMedia PLC is expected to generate 85.26 times less return on investment than GSTechnologies. But when comparing it to its historical volatility, XLMedia PLC is 1.48 times less risky than GSTechnologies. It trades about 0.0 of its potential returns per unit of risk. GSTechnologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  78.00  in GSTechnologies on September 23, 2024 and sell it today you would earn a total of  100.00  from holding GSTechnologies or generate 128.21% return on investment over 90 days.

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

XLMedia PLC  vs.  GSTechnologies

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

GSTechnologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GSTechnologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GSTechnologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XLMedia PLC and GSTechnologies

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

The idea behind XLMedia PLC and GSTechnologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.