Correlation Between XAS and PURA

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

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

Diversification Opportunities for XAS and PURA

0.05

Correlation Coefficient

XAS  PURA

Significant diversification

The 3 months correlation between XAS and PURA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding XAS and PURA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURA and XAS 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 XAS are associated (or correlated) with PURA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURA has no effect on the direction of XAS i.e., XAS and PURA go up and down completely randomly.

Pair Corralation between XAS and PURA

If you would invest  4.20  in PURA on January 28, 2024 and sell it today you would earn a total of  0.00  from holding PURA or generate 0.0% return on investment over 90 days.

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

XAS  vs.  PURA

XAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XAS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, XAS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PURA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PURA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PURA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with XAS and PURA

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

The idea behind XAS and PURA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.