Correlation Between Exco Technologies and Slam Exploration

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

Diversification Opportunities for Exco Technologies and Slam Exploration

0.02

Correlation Coefficient

Exco Technologies  Slam Exploration

Significant diversification

The 3 months correlation between Exco and Slam is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Slam Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slam Exploration 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 Slam Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slam Exploration has no effect on the direction of Exco Technologies i.e., Exco Technologies and Slam Exploration go up and down completely randomly.

Pair Corralation between Exco Technologies and Slam Exploration

Assuming the 90 days trading horizon Exco Technologies Limited is expected to generate 0.1 times more return on investment than Slam Exploration. However, Exco Technologies Limited is 9.69 times less risky than Slam Exploration. It trades about -0.38 of its potential returns per unit of risk. Slam Exploration is currently generating about -0.04 per unit of risk. If you would invest  838.00  in Exco Technologies Limited on September 23, 2024 and sell it today you would lose (88.00) from holding Exco Technologies Limited or give up 10.5% of portfolio value over 90 days.

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

Exco Technologies Limited  vs.  Slam Exploration

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 newest stock price disarray, may contribute to short-term losses for the investors.

Slam Exploration

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Slam Exploration are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Slam Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exco Technologies and Slam Exploration

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

The idea behind Exco Technologies Limited and Slam Exploration 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.