Correlation Between Shinil Electronics and Xavis

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

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

Diversification Opportunities for Shinil Electronics and Xavis

0.52

Correlation Coefficient

Shinil Electronics  Xavis

Very weak diversification

The 3 months correlation between Shinil and Xavis is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Electronics Co and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis and Shinil Electronics 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 Shinil Electronics Co are associated (or correlated) with Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Shinil Electronics i.e., Shinil Electronics and Xavis go up and down completely randomly.

Pair Corralation between Shinil Electronics and Xavis

Assuming the 90 days trading horizon Shinil Electronics is expected to generate 6.42 times less return on investment than Xavis. But when comparing it to its historical volatility, Shinil Electronics Co is 4.88 times less risky than Xavis. It trades about 0.1 of its potential returns per unit of risk. Xavis Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  126,900  in Xavis Co on December 25, 2024 and sell it today you would earn a total of  40,000  from holding Xavis Co or generate 31.52% return on investment over 90 days.

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

Shinil Electronics Co  vs.  Xavis Co

Shinil Electronics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shinil Electronics Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinil Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xavis

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xavis Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xavis sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shinil Electronics and Xavis

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

The idea behind Shinil Electronics Co and Xavis 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.