Correlation Between Xizi Clean and Kingclean Electric

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

Diversification Opportunities for Xizi Clean and Kingclean Electric

0.79

Correlation Coefficient

Xizi Clean  Kingclean Electric

Poor diversification

The 3 months correlation between Xizi and Kingclean is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Xizi Clean Energy and Kingclean Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingclean Electric 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 Kingclean Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingclean Electric has no effect on the direction of Xizi Clean i.e., Xizi Clean and Kingclean Electric go up and down completely randomly.

Pair Corralation between Xizi Clean and Kingclean Electric

Assuming the 90 days trading horizon Xizi Clean Energy is expected to generate 1.41 times more return on investment than Kingclean Electric. However, Xizi Clean is 1.41 times more volatile than Kingclean Electric Co. It trades about -0.03 of its potential returns per unit of risk. Kingclean Electric Co is currently generating about -0.08 per unit of risk. If you would invest  1,169  in Xizi Clean Energy on October 10, 2024 and sell it today you would lose (64.00) from holding Xizi Clean Energy or give up 5.47% of portfolio value over 90 days.

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

Xizi Clean Energy  vs.  Kingclean Electric Co

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 somewhat strong basic indicators, Xizi Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kingclean Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingclean Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Xizi Clean and Kingclean Electric

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

The idea behind Xizi Clean Energy and Kingclean Electric 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.