Correlation Between Xinyi Solar and Aurora Solar
Can any of the company-specific risk be diversified away by investing in both Xinyi Solar and Aurora 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 Xinyi Solar and Aurora Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinyi Solar Holdings and Aurora Solar Technologies, you can compare the effects of market volatilities on Xinyi Solar and Aurora 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 Xinyi Solar with a short position of Aurora Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyi Solar and Aurora Solar.
Diversification Opportunities for Xinyi Solar and Aurora Solar
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xinyi and Aurora is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Xinyi Solar Holdings and Aurora Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Solar Technologies and Xinyi Solar 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 Xinyi Solar Holdings are associated (or correlated) with Aurora Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Solar Technologies has no effect on the direction of Xinyi Solar i.e., Xinyi Solar and Aurora Solar go up and down completely randomly.
Pair Corralation between Xinyi Solar and Aurora Solar
Assuming the 90 days horizon Xinyi Solar is expected to generate 10.96 times less return on investment than Aurora Solar. But when comparing it to its historical volatility, Xinyi Solar Holdings is 2.65 times less risky than Aurora Solar. It trades about 0.01 of its potential returns per unit of risk. Aurora Solar Technologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.60 in Aurora Solar Technologies on September 1, 2024 and sell it today you would lose (1.14) from holding Aurora Solar Technologies or give up 43.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Xinyi Solar Holdings vs. Aurora Solar Technologies
Performance |
| Timeline |
| Xinyi Solar Holdings |
| Aurora Solar Technologies |
Xinyi Solar and Aurora Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinyi Solar and Aurora Solar
The main advantage of trading using opposite Xinyi Solar and Aurora Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinyi Solar position performs unexpectedly, Aurora 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 Aurora Solar will offset losses from the drop in Aurora Solar's long position.| Xinyi Solar vs. SMA Solar Technology | Xinyi Solar vs. SMA Solar Technology | Xinyi Solar vs. GCL Poly Energy Holdings | Xinyi Solar vs. Three Sixty Solar |
| Aurora Solar vs. BCE Inc | Aurora Solar vs. Axiologix | Aurora Solar vs. Advanced Info Service | Aurora Solar vs. HUMANA INC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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