Correlation Between Reading International and Almacenes Xito

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

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

Diversification Opportunities for Reading International and Almacenes Xito

-0.5

Correlation Coefficient

Reading International  Almacenes Xito

Very good diversification

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

Pair Corralation between Reading International and Almacenes Xito

If you would invest  124.00  in Reading International on July 5, 2025 and sell it today you would earn a total of  20.00  from holding Reading International or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Reading International  vs.  Almacenes Xito SA

Reading International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Reading International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Reading International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Almacenes Xito SA

Risk-Adjusted Performance

Weakest

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

Pair Trading with Reading International and Almacenes Xito

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

The idea behind Reading International and Almacenes Xito SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.