Correlation Between Xinjiang Beixin and Sanxiang Advanced

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

By analyzing existing cross correlation between Xinjiang Beixin RoadBridge and Sanxiang Advanced Materials, you can compare the effects of market volatilities on Xinjiang Beixin and Sanxiang Advanced 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 Xinjiang Beixin with a short position of Sanxiang Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Beixin and Sanxiang Advanced.

Diversification Opportunities for Xinjiang Beixin and Sanxiang Advanced

0.39

Correlation Coefficient

Xinjiang Beixin  Sanxiang Advanced

Weak diversification

The 3 months correlation between Xinjiang and Sanxiang is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Beixin RoadBridge and Sanxiang Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanxiang Advanced and Xinjiang Beixin 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 Xinjiang Beixin RoadBridge are associated (or correlated) with Sanxiang Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanxiang Advanced has no effect on the direction of Xinjiang Beixin i.e., Xinjiang Beixin and Sanxiang Advanced go up and down completely randomly.

Pair Corralation between Xinjiang Beixin and Sanxiang Advanced

Assuming the 90 days trading horizon Xinjiang Beixin RoadBridge is expected to under-perform the Sanxiang Advanced. In addition to that, Xinjiang Beixin is 2.2 times more volatile than Sanxiang Advanced Materials. It trades about -0.14 of its total potential returns per unit of risk. Sanxiang Advanced Materials is currently generating about -0.03 per unit of volatility. If you would invest  1,715  in Sanxiang Advanced Materials on October 10, 2024 and sell it today you would lose (30.00) from holding Sanxiang Advanced Materials or give up 1.75% of portfolio value over 90 days.

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

Xinjiang Beixin RoadBridge  vs.  Sanxiang Advanced Materials

Xinjiang Beixin Road

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Beixin RoadBridge are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xinjiang Beixin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sanxiang Advanced

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sanxiang Advanced Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanxiang Advanced may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xinjiang Beixin and Sanxiang Advanced

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

The idea behind Xinjiang Beixin RoadBridge and Sanxiang Advanced Materials 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.