Correlation Between International Games and Xintec
Can any of the company-specific risk be diversified away by investing in both International Games and Xintec 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 International Games and Xintec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Games System and Xintec, you can compare the effects of market volatilities on International Games and Xintec 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 International Games with a short position of Xintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Games and Xintec.
Diversification Opportunities for International Games and Xintec
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between International and Xintec is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Games System and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and International Games 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 International Games System are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of International Games i.e., International Games and Xintec go up and down completely randomly.
Pair Corralation between International Games and Xintec
Assuming the 90 days trading horizon International Games System is expected to generate 0.66 times more return on investment than Xintec. However, International Games System is 1.53 times less risky than Xintec. It trades about -0.06 of its potential returns per unit of risk. Xintec is currently generating about -0.1 per unit of risk. If you would invest 102,000 in International Games System on September 4, 2024 and sell it today you would lose (3,600) from holding International Games System or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Games System vs. Xintec
Performance |
| Timeline |
| International Games |
| Xintec |
International Games and Xintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Games and Xintec
The main advantage of trading using opposite International Games and Xintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Games position performs unexpectedly, Xintec 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 Xintec will offset losses from the drop in Xintec's long position.The idea behind International Games System and Xintec 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.| Xintec vs. Taiwan Semiconductor Manufacturing | Xintec vs. Yang Ming Marine | Xintec vs. AU Optronics | Xintec vs. Innolux Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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