Correlation Between Western Investment and Exco Technologies

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

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

Diversification Opportunities for Western Investment and Exco Technologies

0.21

Correlation Coefficient

Western Investment  Exco Technologies

Modest diversification

The 3 months correlation between Western and Exco is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies and Western Investment 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 Western Investment are associated (or correlated) with Exco Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exco Technologies has no effect on the direction of Western Investment i.e., Western Investment and Exco Technologies go up and down completely randomly.

Pair Corralation between Western Investment and Exco Technologies

Given the investment horizon of 90 days Western Investment is expected to generate 2.15 times more return on investment than Exco Technologies. However, Western Investment is 2.15 times more volatile than Exco Technologies Limited. It trades about 0.07 of its potential returns per unit of risk. Exco Technologies Limited is currently generating about 0.13 per unit of risk. If you would invest  57.00  in Western Investment on May 6, 2025 and sell it today you would earn a total of  7.00  from holding Western Investment or generate 12.28% return on investment over 90 days.

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

Western Investment  vs.  Exco Technologies Limited

Western Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Western Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Exco Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exco Technologies Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Exco Technologies may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Western Investment and Exco Technologies

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

The idea behind Western Investment and Exco Technologies Limited 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 Stocks Directory module to find actively traded stocks across global markets.