Correlation Between Xiangyang Automobile and Empyrean Technology

Can any of the company-specific risk be diversified away by investing in both Xiangyang Automobile and Empyrean Technology 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 Xiangyang Automobile and Empyrean Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xiangyang Automobile Bearing and Empyrean Technology Co, you can compare the effects of market volatilities on Xiangyang Automobile and Empyrean Technology 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 Xiangyang Automobile with a short position of Empyrean Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyang Automobile and Empyrean Technology.

Diversification Opportunities for Xiangyang Automobile and Empyrean Technology

0.84

Correlation Coefficient

Xiangyang Automobile  Empyrean Technology

Very poor diversification

The 3 months correlation between Xiangyang and Empyrean is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyang Automobile Bearing and Empyrean Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empyrean Technology and Xiangyang Automobile 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 Xiangyang Automobile Bearing are associated (or correlated) with Empyrean Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empyrean Technology has no effect on the direction of Xiangyang Automobile i.e., Xiangyang Automobile and Empyrean Technology go up and down completely randomly.

Pair Corralation between Xiangyang Automobile and Empyrean Technology

Assuming the 90 days trading horizon Xiangyang Automobile is expected to generate 4.15 times less return on investment than Empyrean Technology. In addition to that, Xiangyang Automobile is 1.07 times more volatile than Empyrean Technology Co. It trades about 0.01 of its total potential returns per unit of risk. Empyrean Technology Co is currently generating about 0.04 per unit of volatility. If you would invest  10,308  in Empyrean Technology Co on September 12, 2024 and sell it today you would earn a total of  3,088  from holding Empyrean Technology Co or generate 29.96% return on investment over 90 days.

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

Xiangyang Automobile Bearing  vs.  Empyrean Technology Co

Xiangyang Automobile

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyang Automobile Bearing are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangyang Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Empyrean Technology

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Empyrean Technology Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Empyrean Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xiangyang Automobile and Empyrean Technology

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

The idea behind Xiangyang Automobile Bearing and Empyrean Technology Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.