Correlation Between Xizi Clean and SI TECH

Can any of the company-specific risk be diversified away by investing in both Xizi Clean and SI TECH 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 Xizi Clean and SI TECH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xizi Clean Energy and SI TECH Information Technology, you can compare the effects of market volatilities on Xizi Clean and SI TECH 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 Xizi Clean with a short position of SI TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xizi Clean and SI TECH.

Diversification Opportunities for Xizi Clean and SI TECH

0.57

Correlation Coefficient

Xizi Clean  SI TECH

Very weak diversification

The 3 months correlation between Xizi and 300608 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Xizi Clean Energy and SI TECH Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SI TECH Information and Xizi Clean 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 Xizi Clean Energy are associated (or correlated) with SI TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SI TECH Information has no effect on the direction of Xizi Clean i.e., Xizi Clean and SI TECH go up and down completely randomly.

Pair Corralation between Xizi Clean and SI TECH

Assuming the 90 days trading horizon Xizi Clean Energy is expected to generate 0.39 times more return on investment than SI TECH. However, Xizi Clean Energy is 2.56 times less risky than SI TECH. It trades about -0.4 of its potential returns per unit of risk. SI TECH Information Technology is currently generating about -0.35 per unit of risk. If you would invest  1,182  in Xizi Clean Energy on October 8, 2024 and sell it today you would lose (132.00) from holding Xizi Clean Energy or give up 11.17% of portfolio value over 90 days.

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

Xizi Clean Energy  vs.  SI TECH Information Technology

Xizi Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xizi Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SI TECH Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SI TECH Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Xizi Clean and SI TECH

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

The idea behind Xizi Clean Energy and SI TECH Information Technology 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.