Correlation Between Xinjiang Baodi and Shandong Sanyuan

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Can any of the company-specific risk be diversified away by investing in both Xinjiang Baodi and Shandong Sanyuan 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 Xinjiang Baodi and Shandong Sanyuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinjiang Baodi Mining and Shandong Sanyuan Biotechnology, you can compare the effects of market volatilities on Xinjiang Baodi and Shandong Sanyuan 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 Xinjiang Baodi with a short position of Shandong Sanyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Baodi and Shandong Sanyuan.

Diversification Opportunities for Xinjiang Baodi and Shandong Sanyuan

XinjiangShandongDiversified AwayXinjiangShandongDiversified Away100%
0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Xinjiang and Shandong is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and Shandong Sanyuan Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sanyuan Bio and Xinjiang Baodi 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 Xinjiang Baodi Mining are associated (or correlated) with Shandong Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sanyuan Bio has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and Shandong Sanyuan go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Shandong Sanyuan

Assuming the 90 days trading horizon Xinjiang Baodi Mining is expected to generate 1.35 times more return on investment than Shandong Sanyuan. However, Xinjiang Baodi is 1.35 times more volatile than Shandong Sanyuan Biotechnology. It trades about 0.02 of its potential returns per unit of risk. Shandong Sanyuan Biotechnology is currently generating about -0.02 per unit of risk. If you would invest  604.00  in Xinjiang Baodi Mining on October 29, 2024 and sell it today you would earn a total of  16.00  from holding Xinjiang Baodi Mining or generate 2.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Xinjiang Baodi Mining  vs.  Shandong Sanyuan Biotechnology

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-505101520
JavaScript chart by amCharts 3.21.15601121 301206
       Timeline  
Xinjiang Baodi Mining 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xinjiang Baodi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanJan66.26.46.66.877.27.4
Shandong Sanyuan Bio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shandong Sanyuan Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shandong Sanyuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanJan24252627282930

Xinjiang Baodi and Shandong Sanyuan Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.09-6.06-4.03-2.0-0.03381.964.016.078.1310.19 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15601121 301206
       Returns  

Pair Trading with Xinjiang Baodi and Shandong Sanyuan

The main advantage of trading using opposite Xinjiang Baodi and Shandong Sanyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Baodi position performs unexpectedly, Shandong Sanyuan 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 Shandong Sanyuan will offset losses from the drop in Shandong Sanyuan's long position.
The idea behind Xinjiang Baodi Mining and Shandong Sanyuan Biotechnology 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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