Correlation Between Xinhua Winshare and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Xinhua Winshare and Methode Electronics 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 Xinhua Winshare and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinhua Winshare Publishing and Methode Electronics, you can compare the effects of market volatilities on Xinhua Winshare and Methode Electronics 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 Xinhua Winshare with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinhua Winshare and Methode Electronics.
Diversification Opportunities for Xinhua Winshare and Methode Electronics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinhua and Methode is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Xinhua Winshare 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 Xinhua Winshare Publishing are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and Methode Electronics go up and down completely randomly.
Pair Corralation between Xinhua Winshare and Methode Electronics
Assuming the 90 days horizon Xinhua Winshare Publishing is expected to generate 1.21 times more return on investment than Methode Electronics. However, Xinhua Winshare is 1.21 times more volatile than Methode Electronics. It trades about 0.11 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.05 per unit of risk. If you would invest 13.00 in Xinhua Winshare Publishing on October 15, 2024 and sell it today you would earn a total of 117.00 from holding Xinhua Winshare Publishing or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xinhua Winshare Publishing vs. Methode Electronics
Performance |
| Timeline |
| Xinhua Winshare Publ |
| Methode Electronics |
Xinhua Winshare and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinhua Winshare and Methode Electronics
The main advantage of trading using opposite Xinhua Winshare and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinhua Winshare position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Xinhua Winshare vs. CeoTronics AG | Xinhua Winshare vs. FORMPIPE SOFTWARE AB | Xinhua Winshare vs. CEOTRONICS | Xinhua Winshare vs. Take Two Interactive Software |
| Methode Electronics vs. Monster Beverage Corp | Methode Electronics vs. BG Foods | Methode Electronics vs. THAI BEVERAGE | Methode Electronics vs. Fevertree Drinks PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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