Correlation Between Xiaomi Corp and Universal Electronics
Can any of the company-specific risk be diversified away by investing in both Xiaomi Corp and Universal 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 Xiaomi Corp and Universal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiaomi Corp and Universal Electronics, you can compare the effects of market volatilities on Xiaomi Corp and Universal 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 Xiaomi Corp with a short position of Universal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi Corp and Universal Electronics.
Diversification Opportunities for Xiaomi Corp and Universal Electronics
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xiaomi and Universal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi Corp and Universal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Electronics and Xiaomi 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 Xiaomi Corp are associated (or correlated) with Universal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Electronics has no effect on the direction of Xiaomi Corp i.e., Xiaomi Corp and Universal Electronics go up and down completely randomly.
Pair Corralation between Xiaomi Corp and Universal Electronics
Assuming the 90 days horizon Xiaomi Corp is expected to generate 0.65 times more return on investment than Universal Electronics. However, Xiaomi Corp is 1.53 times less risky than Universal Electronics. It trades about 0.25 of its potential returns per unit of risk. Universal Electronics is currently generating about 0.09 per unit of risk. If you would invest 350.00 in Xiaomi Corp on November 1, 2024 and sell it today you would earn a total of 180.00 from holding Xiaomi Corp or generate 51.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiaomi Corp vs. Universal Electronics
Performance |
| Timeline |
| Xiaomi Corp |
| Universal Electronics |
Xiaomi Corp and Universal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiaomi Corp and Universal Electronics
The main advantage of trading using opposite Xiaomi Corp and Universal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiaomi Corp position performs unexpectedly, Universal 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 Universal Electronics will offset losses from the drop in Universal Electronics' long position.| Xiaomi Corp vs. Zepp Health Corp | Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. LG Display Co | Xiaomi Corp vs. Sharp |
| Universal Electronics vs. LG Display Co | Universal Electronics vs. Zepp Health Corp | Universal Electronics vs. Sonos Inc | Universal Electronics vs. VOXX International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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