Correlation Between Lander Sports and Xinke Material

Can any of the company-specific risk be diversified away by investing in both Lander Sports and Xinke Material 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 Lander Sports and Xinke Material into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lander Sports Development and Xinke Material, you can compare the effects of market volatilities on Lander Sports and Xinke Material 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 Lander Sports with a short position of Xinke Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lander Sports and Xinke Material.

Diversification Opportunities for Lander Sports and Xinke Material

0.11

Correlation Coefficient

Lander Sports  Xinke Material

Average diversification

The 3 months correlation between Lander and Xinke is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lander Sports Development and Xinke Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinke Material and Lander Sports 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 Lander Sports Development are associated (or correlated) with Xinke Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinke Material has no effect on the direction of Lander Sports i.e., Lander Sports and Xinke Material go up and down completely randomly.

Pair Corralation between Lander Sports and Xinke Material

Assuming the 90 days trading horizon Lander Sports Development is expected to generate 0.77 times more return on investment than Xinke Material. However, Lander Sports Development is 1.3 times less risky than Xinke Material. It trades about 0.09 of its potential returns per unit of risk. Xinke Material is currently generating about -0.01 per unit of risk. If you would invest  310.00  in Lander Sports Development on December 30, 2024 and sell it today you would earn a total of  46.00  from holding Lander Sports Development or generate 14.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lander Sports Development  vs.  Xinke Material

Lander Sports Development

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lander Sports Development are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lander Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Xinke Material

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinke Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xinke Material is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lander Sports and Xinke Material

The main advantage of trading using opposite Lander Sports and Xinke Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lander Sports position performs unexpectedly, Xinke Material 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 Xinke Material will offset losses from the drop in Xinke Material's long position.

The idea behind Lander Sports Development and Xinke Material 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.