Correlation Between Basanite and Xinyi Glass
Can any of the company-specific risk be diversified away by investing in both Basanite and Xinyi Glass 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 Basanite and Xinyi Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basanite and Xinyi Glass Holdings, you can compare the effects of market volatilities on Basanite and Xinyi Glass 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 Basanite with a short position of Xinyi Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basanite and Xinyi Glass.
Diversification Opportunities for Basanite and Xinyi Glass
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Basanite and Xinyi is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Basanite and Xinyi Glass Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Glass Holdings and Basanite 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 Basanite are associated (or correlated) with Xinyi Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Glass Holdings has no effect on the direction of Basanite i.e., Basanite and Xinyi Glass go up and down completely randomly.
Pair Corralation between Basanite and Xinyi Glass
Given the investment horizon of 90 days Basanite is expected to generate 5.1 times more return on investment than Xinyi Glass. However, Basanite is 5.1 times more volatile than Xinyi Glass Holdings. It trades about 0.02 of its potential returns per unit of risk. Xinyi Glass Holdings is currently generating about -0.17 per unit of risk. If you would invest 5.90 in Basanite on August 31, 2024 and sell it today you would lose (0.90) from holding Basanite or give up 15.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basanite vs. Xinyi Glass Holdings
Performance |
| Timeline |
| Basanite |
| Xinyi Glass Holdings |
Basanite and Xinyi Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basanite and Xinyi Glass
The main advantage of trading using opposite Basanite and Xinyi Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basanite position performs unexpectedly, Xinyi Glass 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 Glass will offset losses from the drop in Xinyi Glass' long position.| Basanite vs. Xinyi Glass Holdings | Basanite vs. CEMATRIX | Basanite vs. Anhui Conch Cement | Basanite vs. CEMEX SAB de |
| Xinyi Glass vs. Xinyi Glass Holdings | Xinyi Glass vs. CEMATRIX | Xinyi Glass vs. Anhui Conch Cement | Xinyi Glass vs. Basanite |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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