Correlation Between XMReality and Rolling Optics

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

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

Diversification Opportunities for XMReality and Rolling Optics

-0.6

Correlation Coefficient

XMReality  Rolling Optics

Excellent diversification

The 3 months correlation between XMReality and Rolling is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding XMReality AB and Rolling Optics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolling Optics Holding and XMReality 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 XMReality AB are associated (or correlated) with Rolling Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolling Optics Holding has no effect on the direction of XMReality i.e., XMReality and Rolling Optics go up and down completely randomly.

Pair Corralation between XMReality and Rolling Optics

Assuming the 90 days trading horizon XMReality AB is expected to under-perform the Rolling Optics. But the stock apears to be less risky and, when comparing its historical volatility, XMReality AB is 1.91 times less risky than Rolling Optics. The stock trades about -0.02 of its potential returns per unit of risk. The Rolling Optics Holding is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Rolling Optics Holding on April 23, 2025 and sell it today you would earn a total of  65.00  from holding Rolling Optics Holding or generate 127.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

XMReality AB  vs.  Rolling Optics Holding

XMReality AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days XMReality AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, XMReality is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Rolling Optics Holding

Risk-Adjusted Performance

Good

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

Pair Trading with XMReality and Rolling Optics

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

The idea behind XMReality AB and Rolling Optics Holding 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..