Correlation Between Sharp Corp and Xiaomi Corp
Can any of the company-specific risk be diversified away by investing in both Sharp Corp and Xiaomi Corp 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 Sharp Corp and Xiaomi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sharp Corp ADR and Xiaomi Corp ADR, you can compare the effects of market volatilities on Sharp Corp and Xiaomi Corp 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 Sharp Corp with a short position of Xiaomi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharp Corp and Xiaomi Corp.
Diversification Opportunities for Sharp Corp and Xiaomi Corp
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sharp and Xiaomi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Sharp Corp ADR and Xiaomi Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp ADR and Sharp Corp 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 Sharp Corp ADR are associated (or correlated) with Xiaomi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi Corp ADR has no effect on the direction of Sharp Corp i.e., Sharp Corp and Xiaomi Corp go up and down completely randomly.
Pair Corralation between Sharp Corp and Xiaomi Corp
Assuming the 90 days horizon Sharp Corp is expected to generate 4.01 times less return on investment than Xiaomi Corp. In addition to that, Sharp Corp is 1.67 times more volatile than Xiaomi Corp ADR. It trades about 0.04 of its total potential returns per unit of risk. Xiaomi Corp ADR is currently generating about 0.24 per unit of volatility. If you would invest 1,326 in Xiaomi Corp ADR on August 26, 2024 and sell it today you would earn a total of 494.00 from holding Xiaomi Corp ADR or generate 37.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sharp Corp ADR vs. Xiaomi Corp ADR
Performance |
| Timeline |
| Sharp Corp ADR |
| Xiaomi Corp ADR |
Sharp Corp and Xiaomi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sharp Corp and Xiaomi Corp
The main advantage of trading using opposite Sharp Corp and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharp Corp position performs unexpectedly, Xiaomi Corp 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 Corp will offset losses from the drop in Xiaomi Corp's long position.| Sharp Corp vs. FitLife Brands, Common | Sharp Corp vs. HUMANA INC | Sharp Corp vs. SCOR PK | Sharp Corp vs. Aquagold International |
| Xiaomi Corp vs. Apple Inc | Xiaomi Corp vs. Xiaomi Corp | Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. LG Display Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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