Correlation Between Three Sixty and Xinyi Solar
Can any of the company-specific risk be diversified away by investing in both Three Sixty and Xinyi Solar 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 Three Sixty and Xinyi Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Three Sixty Solar and Xinyi Solar Holdings, you can compare the effects of market volatilities on Three Sixty and Xinyi Solar 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 Three Sixty with a short position of Xinyi Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Three Sixty and Xinyi Solar.
Diversification Opportunities for Three Sixty and Xinyi Solar
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Three and Xinyi is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Three Sixty Solar and Xinyi Solar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Solar Holdings and Three Sixty 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 Three Sixty Solar are associated (or correlated) with Xinyi Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Solar Holdings has no effect on the direction of Three Sixty i.e., Three Sixty and Xinyi Solar go up and down completely randomly.
Pair Corralation between Three Sixty and Xinyi Solar
Assuming the 90 days horizon Three Sixty Solar is expected to under-perform the Xinyi Solar. In addition to that, Three Sixty is 11.88 times more volatile than Xinyi Solar Holdings. It trades about -0.25 of its total potential returns per unit of risk. Xinyi Solar Holdings is currently generating about -0.44 per unit of volatility. If you would invest 1,036 in Xinyi Solar Holdings on August 28, 2024 and sell it today you would lose (245.00) from holding Xinyi Solar Holdings or give up 23.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Three Sixty Solar vs. Xinyi Solar Holdings
Performance |
| Timeline |
| Three Sixty Solar |
| Xinyi Solar Holdings |
Three Sixty and Xinyi Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Three Sixty and Xinyi Solar
The main advantage of trading using opposite Three Sixty and Xinyi Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Three Sixty position performs unexpectedly, Xinyi Solar 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 Xinyi Solar will offset losses from the drop in Xinyi Solar's long position.The idea behind Three Sixty Solar and Xinyi Solar Holdings 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.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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