Correlation Between First Majestic and Xiaomi
Can any of the company-specific risk be diversified away by investing in both First Majestic and Xiaomi 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 First Majestic and Xiaomi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Majestic Silver and Xiaomi, you can compare the effects of market volatilities on First Majestic and Xiaomi 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 First Majestic with a short position of Xiaomi. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Majestic and Xiaomi.
Diversification Opportunities for First Majestic and Xiaomi
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and Xiaomi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Xiaomi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi and First Majestic 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 First Majestic Silver are associated (or correlated) with Xiaomi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi has no effect on the direction of First Majestic i.e., First Majestic and Xiaomi go up and down completely randomly.
Pair Corralation between First Majestic and Xiaomi
Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Xiaomi. But the stock apears to be less risky and, when comparing its historical volatility, First Majestic Silver is 4.05 times less risky than Xiaomi. The stock trades about -0.03 of its potential returns per unit of risk. The Xiaomi is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,370 in Xiaomi on September 3, 2024 and sell it today you would earn a total of 3,030 from holding Xiaomi or generate 69.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Majestic Silver vs. Xiaomi
Performance |
| Timeline |
| First Majestic Silver |
| Xiaomi |
First Majestic and Xiaomi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Majestic and Xiaomi
The main advantage of trading using opposite First Majestic and Xiaomi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic position performs unexpectedly, Xiaomi 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 Xiaomi will offset losses from the drop in Xiaomi's long position.| First Majestic vs. Samsung Electronics Co | First Majestic vs. Southwest Airlines | First Majestic vs. Genworth Financial | First Majestic vs. UnitedHealth Group Incorporated |
| Xiaomi vs. GMxico Transportes SAB | Xiaomi vs. First Majestic Silver | Xiaomi vs. UnitedHealth Group Incorporated | Xiaomi vs. Verizon Communications |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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