Correlation Between Xinjiang Beixin and AVIC UAS

Can any of the company-specific risk be diversified away by investing in both Xinjiang Beixin and AVIC UAS 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 AVIC UAS 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 AVIC UAS Co, you can compare the effects of market volatilities on Xinjiang Beixin and AVIC UAS 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 AVIC UAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Beixin and AVIC UAS.

Diversification Opportunities for Xinjiang Beixin and AVIC UAS

0.18

Correlation Coefficient

Xinjiang Beixin  AVIC UAS

Average diversification

The 3 months correlation between Xinjiang and AVIC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Beixin RoadBridge and AVIC UAS Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIC UAS 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 AVIC UAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIC UAS has no effect on the direction of Xinjiang Beixin i.e., Xinjiang Beixin and AVIC UAS go up and down completely randomly.

Pair Corralation between Xinjiang Beixin and AVIC UAS

Assuming the 90 days trading horizon Xinjiang Beixin RoadBridge is expected to generate 1.49 times more return on investment than AVIC UAS. However, Xinjiang Beixin is 1.49 times more volatile than AVIC UAS Co. It trades about -0.18 of its potential returns per unit of risk. AVIC UAS Co is currently generating about -0.3 per unit of risk. If you would invest  430.00  in Xinjiang Beixin RoadBridge on October 11, 2024 and sell it today you would lose (71.00) from holding Xinjiang Beixin RoadBridge or give up 16.51% of portfolio value over 90 days.

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

Xinjiang Beixin RoadBridge  vs.  AVIC UAS Co

Xinjiang Beixin Road

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Beixin RoadBridge are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Beixin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AVIC UAS

Risk-Adjusted Performance

2 of 100

Very Weak

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

Pair Trading with Xinjiang Beixin and AVIC UAS

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

The idea behind Xinjiang Beixin RoadBridge and AVIC UAS 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.