Correlation Between Industrial Securities and Xiangcai
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By analyzing existing cross correlation between Industrial Securities Co and Xiangcai Co, you can compare the effects of market volatilities on Industrial Securities and Xiangcai 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 Industrial Securities with a short position of Xiangcai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Securities and Xiangcai.
Diversification Opportunities for Industrial Securities and Xiangcai
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrial and Xiangcai is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Securities Co and Xiangcai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangcai and Industrial Securities 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 Industrial Securities Co are associated (or correlated) with Xiangcai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangcai has no effect on the direction of Industrial Securities i.e., Industrial Securities and Xiangcai go up and down completely randomly.
Pair Corralation between Industrial Securities and Xiangcai
Assuming the 90 days trading horizon Industrial Securities Co is expected to generate 0.71 times more return on investment than Xiangcai. However, Industrial Securities Co is 1.4 times less risky than Xiangcai. It trades about 0.0 of its potential returns per unit of risk. Xiangcai Co is currently generating about -0.02 per unit of risk. If you would invest 618.00 in Industrial Securities Co on November 30, 2024 and sell it today you would lose (20.00) from holding Industrial Securities Co or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Securities Co vs. Xiangcai Co
Performance |
| Timeline |
| Industrial Securities |
| Xiangcai |
Industrial Securities and Xiangcai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Securities and Xiangcai
The main advantage of trading using opposite Industrial Securities and Xiangcai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Securities position performs unexpectedly, Xiangcai 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 Xiangcai will offset losses from the drop in Xiangcai's long position.The idea behind Industrial Securities Co and Xiangcai Co 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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