Correlation Between Transcontinental and Exco Technologies

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

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

Diversification Opportunities for Transcontinental and Exco Technologies

0.92

Correlation Coefficient

Transcontinental  Exco Technologies

Almost no diversification

The 3 months correlation between Transcontinental and Exco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Transcontinental and Exco Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exco Technologies and Transcontinental 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 Transcontinental 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 Transcontinental i.e., Transcontinental and Exco Technologies go up and down completely randomly.

Pair Corralation between Transcontinental and Exco Technologies

Assuming the 90 days trading horizon Transcontinental is expected to generate 1.37 times less return on investment than Exco Technologies. But when comparing it to its historical volatility, Transcontinental is 1.44 times less risky than Exco Technologies. It trades about 0.19 of its potential returns per unit of risk. Exco Technologies Limited is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  546.00  in Exco Technologies Limited on April 21, 2025 and sell it today you would earn a total of  116.00  from holding Exco Technologies Limited or generate 21.25% return on investment over 90 days.

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

Transcontinental  vs.  Exco Technologies Limited

Transcontinental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transcontinental are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Transcontinental unveiled solid returns over the last few months and may actually be approaching a breakup point.

Exco Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exco Technologies Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Exco Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transcontinental and Exco Technologies

The main advantage of trading using opposite Transcontinental and Exco Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcontinental 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 Transcontinental 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.