Correlation Between Touchstone International and Xingguang Agricultural
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By analyzing existing cross correlation between Touchstone International Medical and Xingguang Agricultural Mach, you can compare the effects of market volatilities on Touchstone International and Xingguang Agricultural 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 Touchstone International with a short position of Xingguang Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Xingguang Agricultural.
Diversification Opportunities for Touchstone International and Xingguang Agricultural
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Touchstone and Xingguang is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Medic and Xingguang Agricultural Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingguang Agricultural and Touchstone International 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 Touchstone International Medical are associated (or correlated) with Xingguang Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingguang Agricultural has no effect on the direction of Touchstone International i.e., Touchstone International and Xingguang Agricultural go up and down completely randomly.
Pair Corralation between Touchstone International and Xingguang Agricultural
Assuming the 90 days trading horizon Touchstone International is expected to generate 1.1 times less return on investment than Xingguang Agricultural. But when comparing it to its historical volatility, Touchstone International Medical is 1.22 times less risky than Xingguang Agricultural. It trades about 0.08 of its potential returns per unit of risk. Xingguang Agricultural Mach is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 723.00 in Xingguang Agricultural Mach on September 1, 2024 and sell it today you would earn a total of 191.00 from holding Xingguang Agricultural Mach or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchstone International Medic vs. Xingguang Agricultural Mach
Performance |
| Timeline |
| Touchstone International |
| Xingguang Agricultural |
Touchstone International and Xingguang Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchstone International and Xingguang Agricultural
The main advantage of trading using opposite Touchstone International and Xingguang Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchstone International position performs unexpectedly, Xingguang Agricultural 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 Xingguang Agricultural will offset losses from the drop in Xingguang Agricultural's long position.The idea behind Touchstone International Medical and Xingguang Agricultural Mach 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.
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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