Correlation Between Xiandai Investment and Chengdu Xinzhu
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By analyzing existing cross correlation between Xiandai Investment Co and Chengdu Xinzhu RoadBridge, you can compare the effects of market volatilities on Xiandai Investment and Chengdu Xinzhu 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 Xiandai Investment with a short position of Chengdu Xinzhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiandai Investment and Chengdu Xinzhu.
Diversification Opportunities for Xiandai Investment and Chengdu Xinzhu
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xiandai and Chengdu is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Xiandai Investment Co and Chengdu Xinzhu RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xinzhu RoadBridge and Xiandai 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 Xiandai Investment Co are associated (or correlated) with Chengdu Xinzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xinzhu RoadBridge has no effect on the direction of Xiandai Investment i.e., Xiandai Investment and Chengdu Xinzhu go up and down completely randomly.
Pair Corralation between Xiandai Investment and Chengdu Xinzhu
Assuming the 90 days trading horizon Xiandai Investment Co is expected to under-perform the Chengdu Xinzhu. But the stock apears to be less risky and, when comparing its historical volatility, Xiandai Investment Co is 3.14 times less risky than Chengdu Xinzhu. The stock trades about -0.13 of its potential returns per unit of risk. The Chengdu Xinzhu RoadBridge is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 523.00 in Chengdu Xinzhu RoadBridge on October 22, 2024 and sell it today you would earn a total of 2.00 from holding Chengdu Xinzhu RoadBridge or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiandai Investment Co vs. Chengdu Xinzhu RoadBridge
Performance |
| Timeline |
| Xiandai Investment |
| Chengdu Xinzhu RoadBridge |
Xiandai Investment and Chengdu Xinzhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiandai Investment and Chengdu Xinzhu
The main advantage of trading using opposite Xiandai Investment and Chengdu Xinzhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiandai Investment position performs unexpectedly, Chengdu Xinzhu 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 Chengdu Xinzhu will offset losses from the drop in Chengdu Xinzhu's long position.The idea behind Xiandai Investment Co and Chengdu Xinzhu RoadBridge 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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Check out your portfolio center.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.
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