Correlation Between Xiaomi Corp and Wearable Devices
Can any of the company-specific risk be diversified away by investing in both Xiaomi Corp and Wearable Devices 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 Wearable Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiaomi Corp and Wearable Devices, you can compare the effects of market volatilities on Xiaomi Corp and Wearable Devices 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 Wearable Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi Corp and Wearable Devices.
Diversification Opportunities for Xiaomi Corp and Wearable Devices
-0.97 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xiaomi and Wearable is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi Corp and Wearable Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wearable Devices 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 Wearable Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wearable Devices has no effect on the direction of Xiaomi Corp i.e., Xiaomi Corp and Wearable Devices go up and down completely randomly.
Pair Corralation between Xiaomi Corp and Wearable Devices
Assuming the 90 days horizon Xiaomi Corp is expected to generate 0.2 times more return on investment than Wearable Devices. However, Xiaomi Corp is 5.01 times less risky than Wearable Devices. It trades about 0.09 of its potential returns per unit of risk. Wearable Devices is currently generating about -0.03 per unit of risk. If you would invest 330.00 in Xiaomi Corp on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Xiaomi Corp or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Xiaomi Corp vs. Wearable Devices
Performance |
| Timeline |
| Xiaomi Corp |
| Wearable Devices |
Xiaomi Corp and Wearable Devices Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiaomi Corp and Wearable Devices
The main advantage of trading using opposite Xiaomi Corp and Wearable Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiaomi Corp position performs unexpectedly, Wearable Devices 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 Wearable Devices will offset losses from the drop in Wearable Devices' long position.| Xiaomi Corp vs. Zepp Health Corp | Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. LG Display Co | Xiaomi Corp vs. Sharp |
| Wearable Devices vs. Koss Corporation | Wearable Devices vs. Wearable Devices | Wearable Devices vs. Sonos Inc | Wearable Devices vs. LG Display Co |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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