Correlation Between Xinyi Glass and China National
Can any of the company-specific risk be diversified away by investing in both Xinyi Glass and China National 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 Glass and China National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinyi Glass Holdings and China National Building, you can compare the effects of market volatilities on Xinyi Glass and China National 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 Glass with a short position of China National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyi Glass and China National.
Diversification Opportunities for Xinyi Glass and China National
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinyi and China is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xinyi Glass Holdings and China National Building in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Building and Xinyi Glass 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 Glass Holdings are associated (or correlated) with China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Building has no effect on the direction of Xinyi Glass i.e., Xinyi Glass and China National go up and down completely randomly.
Pair Corralation between Xinyi Glass and China National
Assuming the 90 days horizon Xinyi Glass Holdings is expected to generate 3.85 times more return on investment than China National. However, Xinyi Glass is 3.85 times more volatile than China National Building. It trades about 0.1 of its potential returns per unit of risk. China National Building is currently generating about 0.02 per unit of risk. If you would invest 46.00 in Xinyi Glass Holdings on August 27, 2024 and sell it today you would earn a total of 64.00 from holding Xinyi Glass Holdings or generate 139.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.32% |
| Values | Daily Returns |
Xinyi Glass Holdings vs. China National Building
Performance |
| Timeline |
| Xinyi Glass Holdings |
| China National Building |
Xinyi Glass and China National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinyi Glass and China National
The main advantage of trading using opposite Xinyi Glass and China National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinyi Glass position performs unexpectedly, China National 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 China National will offset losses from the drop in China National's long position.| Xinyi Glass vs. Anhui Conch Cement | Xinyi Glass vs. CEMEX SAB de | Xinyi Glass vs. CEMATRIX | Xinyi Glass vs. Anhui Conch Cement |
| China National vs. Anhui Conch Cement | China National vs. Buzzi Unicem SpA | China National vs. Wienerberger Baustoffindustrie | China National vs. Lafargeholcim Ltd ADR |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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