Correlation Between XTL Biopharmaceutica and Azorim Investment

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

By analyzing existing cross correlation between XTL Biopharmaceuticals and Azorim Investment Development, you can compare the effects of market volatilities on XTL Biopharmaceutica and Azorim Investment 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 XTL Biopharmaceutica with a short position of Azorim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of XTL Biopharmaceutica and Azorim Investment.

Diversification Opportunities for XTL Biopharmaceutica and Azorim Investment

-0.82

Correlation Coefficient

XTL Biopharmaceutica  Azorim Investment

Pay attention - limited upside

The 3 months correlation between XTL and Azorim is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding XTL Biopharmaceuticals and Azorim Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azorim Investment and XTL Biopharmaceutica 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 XTL Biopharmaceuticals are associated (or correlated) with Azorim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azorim Investment has no effect on the direction of XTL Biopharmaceutica i.e., XTL Biopharmaceutica and Azorim Investment go up and down completely randomly.

Pair Corralation between XTL Biopharmaceutica and Azorim Investment

Assuming the 90 days trading horizon XTL Biopharmaceuticals is expected to under-perform the Azorim Investment. In addition to that, XTL Biopharmaceutica is 2.55 times more volatile than Azorim Investment Development. It trades about -0.13 of its total potential returns per unit of risk. Azorim Investment Development is currently generating about 0.12 per unit of volatility. If you would invest  181,500  in Azorim Investment Development on September 2, 2024 and sell it today you would earn a total of  23,500  from holding Azorim Investment Development or generate 12.95% return on investment over 90 days.

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

XTL Biopharmaceuticals  vs.  Azorim Investment Development

XTL Biopharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTL Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Azorim Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Azorim Investment Development are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Azorim Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XTL Biopharmaceutica and Azorim Investment

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

The idea behind XTL Biopharmaceuticals and Azorim Investment Development 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.