Correlation Between Motorcar Parts and Xinyi Solar
Can any of the company-specific risk be diversified away by investing in both Motorcar Parts and Xinyi Solar 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 Motorcar Parts and Xinyi Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motorcar Parts of and Xinyi Solar Holdings, you can compare the effects of market volatilities on Motorcar Parts and Xinyi Solar 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 Motorcar Parts with a short position of Xinyi Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motorcar Parts and Xinyi Solar.
Diversification Opportunities for Motorcar Parts and Xinyi Solar
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Motorcar and Xinyi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Motorcar Parts of and Xinyi Solar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Solar Holdings and Motorcar Parts 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 Motorcar Parts of are associated (or correlated) with Xinyi Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Solar Holdings has no effect on the direction of Motorcar Parts i.e., Motorcar Parts and Xinyi Solar go up and down completely randomly.
Pair Corralation between Motorcar Parts and Xinyi Solar
Assuming the 90 days horizon Motorcar Parts is expected to generate 3.77 times less return on investment than Xinyi Solar. But when comparing it to its historical volatility, Motorcar Parts of is 1.04 times less risky than Xinyi Solar. It trades about 0.0 of its potential returns per unit of risk. Xinyi Solar Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 50.00 in Xinyi Solar Holdings on September 3, 2024 and sell it today you would lose (8.00) from holding Xinyi Solar Holdings or give up 16.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Motorcar Parts of vs. Xinyi Solar Holdings
Performance |
| Timeline |
| Motorcar Parts |
| Xinyi Solar Holdings |
Motorcar Parts and Xinyi Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motorcar Parts and Xinyi Solar
The main advantage of trading using opposite Motorcar Parts and Xinyi Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorcar Parts position performs unexpectedly, Xinyi Solar 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 Xinyi Solar will offset losses from the drop in Xinyi Solar's long position.The idea behind Motorcar Parts of and Xinyi Solar Holdings 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.| Xinyi Solar vs. Global Ship Lease | Xinyi Solar vs. Motorcar Parts of | Xinyi Solar vs. WisdomTree Investments | Xinyi Solar vs. MGIC INVESTMENT |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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