Correlation Between Xplora Technologies and Polight ASA

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Can any of the company-specific risk be diversified away by investing in both Xplora Technologies and Polight ASA 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 Polight ASA 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 Polight ASA, you can compare the effects of market volatilities on Xplora Technologies and Polight ASA 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 Polight ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xplora Technologies and Polight ASA.

Diversification Opportunities for Xplora Technologies and Polight ASA

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Xplora and Polight is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Xplora Technologies As and Polight ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polight ASA 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 Polight ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polight ASA has no effect on the direction of Xplora Technologies i.e., Xplora Technologies and Polight ASA go up and down completely randomly.

Pair Corralation between Xplora Technologies and Polight ASA

Assuming the 90 days trading horizon Xplora Technologies is expected to generate 1.07 times less return on investment than Polight ASA. But when comparing it to its historical volatility, Xplora Technologies As is 1.62 times less risky than Polight ASA. It trades about 0.46 of its potential returns per unit of risk. Polight ASA is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  370.00  in Polight ASA on September 5, 2024 and sell it today you would earn a total of  116.00  from holding Polight ASA or generate 31.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Xplora Technologies As  vs.  Polight ASA

 Performance 
       Timeline  
Xplora Technologies 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Xplora Technologies As are ranked lower than 28 (%) 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.
Polight ASA 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Polight ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Polight ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Xplora Technologies and Polight ASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xplora Technologies and Polight ASA

The main advantage of trading using opposite Xplora Technologies and Polight ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xplora Technologies position performs unexpectedly, Polight ASA 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 Polight ASA will offset losses from the drop in Polight ASA's long position.
The idea behind Xplora Technologies As and Polight ASA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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