Correlation Between Xplora Technologies and Bouvet

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

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

Diversification Opportunities for Xplora Technologies and Bouvet

0.68

Correlation Coefficient

Xplora Technologies  Bouvet

Poor diversification

The 3 months correlation between Xplora and Bouvet is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xplora Technologies As and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet and Xplora Technologies 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 Xplora Technologies As are associated (or correlated) with Bouvet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouvet has no effect on the direction of Xplora Technologies i.e., Xplora Technologies and Bouvet go up and down completely randomly.

Pair Corralation between Xplora Technologies and Bouvet

Assuming the 90 days trading horizon Xplora Technologies As is expected to generate 2.29 times more return on investment than Bouvet. However, Xplora Technologies is 2.29 times more volatile than Bouvet. It trades about 0.35 of its potential returns per unit of risk. Bouvet is currently generating about 0.12 per unit of risk. If you would invest  1,695  in Xplora Technologies As on September 18, 2024 and sell it today you would earn a total of  1,585  from holding Xplora Technologies As or generate 93.51% return on investment over 90 days.

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

Xplora Technologies As  vs.  Bouvet

Xplora Technologies

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Xplora Technologies As are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Xplora Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Bouvet

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bouvet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bouvet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xplora Technologies and Bouvet

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

The idea behind Xplora Technologies As and Bouvet 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.