Correlation Between Martin Marietta and Xinyi Glass
Can any of the company-specific risk be diversified away by investing in both Martin Marietta 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 Martin Marietta and Xinyi Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martin Marietta Materials and Xinyi Glass Holdings, you can compare the effects of market volatilities on Martin Marietta 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 Martin Marietta with a short position of Xinyi Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Xinyi Glass.
Diversification Opportunities for Martin Marietta and Xinyi Glass
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and Xinyi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials 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 Martin Marietta 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 Martin Marietta Materials 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 Martin Marietta i.e., Martin Marietta and Xinyi Glass go up and down completely randomly.
Pair Corralation between Martin Marietta and Xinyi Glass
Considering the 90-day investment horizon Martin Marietta Materials is expected to generate 0.47 times more return on investment than Xinyi Glass. However, Martin Marietta Materials is 2.12 times less risky than Xinyi Glass. It trades about 0.23 of its potential returns per unit of risk. Xinyi Glass Holdings is currently generating about 0.01 per unit of risk. If you would invest 51,737 in Martin Marietta Materials on November 5, 2024 and sell it today you would earn a total of 2,675 from holding Martin Marietta Materials or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Xinyi Glass Holdings
Performance |
| Timeline |
| Martin Marietta Materials |
| Xinyi Glass Holdings |
Martin Marietta and Xinyi Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Xinyi Glass
The main advantage of trading using opposite Martin Marietta and Xinyi Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta 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.| Martin Marietta vs. CRH PLC ADR | Martin Marietta vs. Eagle Materials | Martin Marietta vs. Summit Materials | Martin Marietta vs. United States Lime |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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