Correlation Between Xperi Corp and CoreCard Corp

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

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

Diversification Opportunities for Xperi Corp and CoreCard Corp

0.41

Correlation Coefficient

Xperi Corp  CoreCard Corp

Very weak diversification

The 3 months correlation between Xperi and CoreCard is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Xperi Corp and CoreCard Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCard Corp and Xperi Corp 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 Xperi Corp are associated (or correlated) with CoreCard Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCard Corp has no effect on the direction of Xperi Corp i.e., Xperi Corp and CoreCard Corp go up and down completely randomly.

Pair Corralation between Xperi Corp and CoreCard Corp

Given the investment horizon of 90 days Xperi Corp is expected to generate 2.09 times less return on investment than CoreCard Corp. But when comparing it to its historical volatility, Xperi Corp is 1.04 times less risky than CoreCard Corp. It trades about 0.1 of its potential returns per unit of risk. CoreCard Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,588  in CoreCard Corp on September 19, 2024 and sell it today you would earn a total of  638.00  from holding CoreCard Corp or generate 40.18% return on investment over 90 days.

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

Xperi Corp  vs.  CoreCard Corp

Xperi Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xperi Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Xperi Corp reported solid returns over the last few months and may actually be approaching a breakup point.

CoreCard Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCard Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, CoreCard Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xperi Corp and CoreCard Corp

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

The idea behind Xperi Corp and CoreCard Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.