Correlation Between Vanfund Urban and Xinjiang Baodi

Can any of the company-specific risk be diversified away by investing in both Vanfund Urban and Xinjiang Baodi 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 Vanfund Urban and Xinjiang Baodi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanfund Urban Investment and Xinjiang Baodi Mining, you can compare the effects of market volatilities on Vanfund Urban and Xinjiang Baodi 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 Vanfund Urban with a short position of Xinjiang Baodi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanfund Urban and Xinjiang Baodi.

Diversification Opportunities for Vanfund Urban and Xinjiang Baodi

0.85

Correlation Coefficient

Vanfund Urban  Xinjiang Baodi

Very poor diversification

The 3 months correlation between Vanfund and Xinjiang is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vanfund Urban Investment and Xinjiang Baodi Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Baodi Mining and Vanfund Urban 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 Vanfund Urban Investment are associated (or correlated) with Xinjiang Baodi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Baodi Mining has no effect on the direction of Vanfund Urban i.e., Vanfund Urban and Xinjiang Baodi go up and down completely randomly.

Pair Corralation between Vanfund Urban and Xinjiang Baodi

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to under-perform the Xinjiang Baodi. In addition to that, Vanfund Urban is 1.98 times more volatile than Xinjiang Baodi Mining. It trades about -0.1 of its total potential returns per unit of risk. Xinjiang Baodi Mining is currently generating about 0.0 per unit of volatility. If you would invest  665.00  in Xinjiang Baodi Mining on September 25, 2024 and sell it today you would lose (3.00) from holding Xinjiang Baodi Mining or give up 0.45% of portfolio value over 90 days.

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

Vanfund Urban Investment  vs.  Xinjiang Baodi Mining

Vanfund Urban Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanfund Urban Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vanfund Urban sustained solid returns over the last few months and may actually be approaching a breakup point.

Xinjiang Baodi Mining

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Baodi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanfund Urban and Xinjiang Baodi

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

The idea behind Vanfund Urban Investment and Xinjiang Baodi Mining 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..