Correlation Between XTL Biopharmaceutica and Nice

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

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

Diversification Opportunities for XTL Biopharmaceutica and Nice

-0.5

Correlation Coefficient

XTL Biopharmaceutica  Nice

Very good diversification

The 3 months correlation between XTL and Nice is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding XTL Biopharmaceuticals and Nice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice 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 Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice has no effect on the direction of XTL Biopharmaceutica i.e., XTL Biopharmaceutica and Nice go up and down completely randomly.

Pair Corralation between XTL Biopharmaceutica and Nice

Assuming the 90 days trading horizon XTL Biopharmaceuticals is expected to under-perform the Nice. In addition to that, XTL Biopharmaceutica is 1.94 times more volatile than Nice. It trades about -0.13 of its total potential returns per unit of risk. Nice is currently generating about 0.01 per unit of volatility. If you would invest  6,458,000  in Nice on September 26, 2024 and sell it today you would lose (63,000) from holding Nice or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.83%
Values	Daily Returns

XTL Biopharmaceuticals  vs.  Nice

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.

Nice

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with XTL Biopharmaceutica and Nice

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

The idea behind XTL Biopharmaceuticals and Nice 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.