Correlation Between Sony Corp and Xiaomi Corp
Can any of the company-specific risk be diversified away by investing in both Sony 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 Sony 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 Sony Corp and Xiaomi Corp, you can compare the effects of market volatilities on Sony 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 Sony Corp with a short position of Xiaomi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony Corp and Xiaomi Corp.
Diversification Opportunities for Sony Corp and Xiaomi Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sony and Xiaomi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sony Corp and Xiaomi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp and Sony 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 Sony Corp 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 has no effect on the direction of Sony Corp i.e., Sony Corp and Xiaomi Corp go up and down completely randomly.
Pair Corralation between Sony Corp and Xiaomi Corp
Assuming the 90 days horizon Sony Corp is expected to generate 2.37 times less return on investment than Xiaomi Corp. But when comparing it to its historical volatility, Sony Corp is 1.13 times less risky than Xiaomi Corp. It trades about 0.05 of its potential returns per unit of risk. Xiaomi Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 159.00 in Xiaomi Corp on November 9, 2024 and sell it today you would earn a total of 361.00 from holding Xiaomi Corp or generate 227.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.26% |
| Values | Daily Returns |
Sony Corp vs. Xiaomi Corp
Performance |
| Timeline |
| Sony Corp |
| Xiaomi Corp |
Sony Corp and Xiaomi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony Corp and Xiaomi Corp
The main advantage of trading using opposite Sony Corp and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony 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.| Sony Corp vs. LG Display Co | Sony Corp vs. Sonos Inc | Sony Corp vs. TCL Electronics Holdings | Sony Corp vs. Sharp Corp ADR |
| Xiaomi Corp vs. Zepp Health Corp | Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. LG Display Co | Xiaomi Corp vs. Sharp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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