Correlation Between Ballard Power and Xiaomi
Can any of the company-specific risk be diversified away by investing in both Ballard Power 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 Ballard Power and Xiaomi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ballard Power Systems and Xiaomi, you can compare the effects of market volatilities on Ballard Power 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 Ballard Power with a short position of Xiaomi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ballard Power and Xiaomi.
Diversification Opportunities for Ballard Power and Xiaomi
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ballard and Xiaomi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ballard Power Systems and Xiaomi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi and Ballard Power 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 Ballard Power Systems 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 Ballard Power i.e., Ballard Power and Xiaomi go up and down completely randomly.
Pair Corralation between Ballard Power and Xiaomi
Assuming the 90 days horizon Ballard Power Systems is expected to under-perform the Xiaomi. In addition to that, Ballard Power is 1.25 times more volatile than Xiaomi. It trades about -0.31 of its total potential returns per unit of risk. Xiaomi is currently generating about 0.25 per unit of volatility. If you would invest 429.00 in Xiaomi on November 2, 2024 and sell it today you would earn a total of 76.00 from holding Xiaomi or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ballard Power Systems vs. Xiaomi
Performance |
| Timeline |
| Ballard Power Systems |
| Xiaomi |
Ballard Power and Xiaomi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ballard Power and Xiaomi
The main advantage of trading using opposite Ballard Power and Xiaomi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ballard Power 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.| Ballard Power vs. Siemens Aktiengesellschaft | Ballard Power vs. Siemens Aktiengesellschaft | Ballard Power vs. Schneider Electric SE | Ballard Power vs. Atlas Copco A |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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