Correlation Between XLMedia PLC and Workspace Group

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

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

Diversification Opportunities for XLMedia PLC and Workspace Group

-0.55

Correlation Coefficient

XLMedia PLC  Workspace Group

Excellent diversification

The 3 months correlation between XLMedia and Workspace is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Workspace Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workspace Group PLC 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 Workspace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workspace Group PLC has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Workspace Group go up and down completely randomly.

Pair Corralation between XLMedia PLC and Workspace Group

Assuming the 90 days trading horizon XLMedia PLC is expected to generate 2.77 times less return on investment than Workspace Group. In addition to that, XLMedia PLC is 3.21 times more volatile than Workspace Group PLC. It trades about 0.0 of its total potential returns per unit of risk. Workspace Group PLC is currently generating about 0.03 per unit of volatility. If you would invest  41,335  in Workspace Group PLC on September 23, 2024 and sell it today you would earn a total of  8,415  from holding Workspace Group PLC or generate 20.36% return on investment over 90 days.

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

XLMedia PLC  vs.  Workspace Group PLC

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.

Workspace Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workspace Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with XLMedia PLC and Workspace Group

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

The idea behind XLMedia PLC and Workspace Group PLC 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.