Correlation Between Sonos and Xiaomi Corp
Can any of the company-specific risk be diversified away by investing in both Sonos 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 Sonos and Xiaomi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonos Inc and Xiaomi Corp, you can compare the effects of market volatilities on Sonos 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 Sonos with a short position of Xiaomi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and Xiaomi Corp.
Diversification Opportunities for Sonos and Xiaomi Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sonos and Xiaomi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and Xiaomi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp and Sonos 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 Sonos Inc 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 Sonos i.e., Sonos and Xiaomi Corp go up and down completely randomly.
Pair Corralation between Sonos and Xiaomi Corp
Given the investment horizon of 90 days Sonos Inc is expected to under-perform the Xiaomi Corp. But the stock apears to be less risky and, when comparing its historical volatility, Sonos Inc is 1.07 times less risky than Xiaomi Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Xiaomi Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 144.00 in Xiaomi Corp on August 24, 2024 and sell it today you would earn a total of 217.00 from holding Xiaomi Corp or generate 150.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonos Inc vs. Xiaomi Corp
Performance |
| Timeline |
| Sonos Inc |
| Xiaomi Corp |
Sonos and Xiaomi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonos and Xiaomi Corp
The main advantage of trading using opposite Sonos and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonos 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.The idea behind Sonos Inc and Xiaomi Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |