Correlation Between Exco Technologies and Precious Metals

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

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

Diversification Opportunities for Exco Technologies and Precious Metals

0.49

Correlation Coefficient

Exco Technologies  Precious Metals

Very weak diversification

The 3 months correlation between Exco and Precious is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And and Exco 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 Exco Technologies Limited are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of Exco Technologies i.e., Exco Technologies and Precious Metals go up and down completely randomly.

Pair Corralation between Exco Technologies and Precious Metals

Assuming the 90 days trading horizon Exco Technologies Limited is expected to under-perform the Precious Metals. But the stock apears to be less risky and, when comparing its historical volatility, Exco Technologies Limited is 1.75 times less risky than Precious Metals. The stock trades about -0.01 of its potential returns per unit of risk. The Precious Metals And is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  177.00  in Precious Metals And on September 28, 2024 and sell it today you would lose (4.00) from holding Precious Metals And or give up 2.26% of portfolio value over 90 days.

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

Exco Technologies Limited  vs.  Precious Metals And

Exco Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exco Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Exco Technologies is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exco Technologies and Precious Metals

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

The idea behind Exco Technologies Limited and Precious Metals And 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.