Correlation Between Xperi Corp and Karooooo

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

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

Diversification Opportunities for Xperi Corp and Karooooo

0.59

Correlation Coefficient

Xperi Corp  Karooooo

Very weak diversification

The 3 months correlation between Xperi and Karooooo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Xperi Corp and Karooooo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karooooo 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 Karooooo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karooooo has no effect on the direction of Xperi Corp i.e., Xperi Corp and Karooooo go up and down completely randomly.

Pair Corralation between Xperi Corp and Karooooo

Given the investment horizon of 90 days Xperi Corp is expected to generate 0.57 times more return on investment than Karooooo. However, Xperi Corp is 1.77 times less risky than Karooooo. It trades about 0.46 of its potential returns per unit of risk. Karooooo is currently generating about 0.17 per unit of risk. If you would invest  824.00  in Xperi Corp on September 19, 2024 and sell it today you would earn a total of  232.00  from holding Xperi Corp or generate 28.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Xperi Corp  vs.  Karooooo

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.

Karooooo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karooooo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Karooooo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xperi Corp and Karooooo

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

The idea behind Xperi Corp and Karooooo 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.