Correlation Between Shenzhen RoadRover and Xinya Electronic

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

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

Diversification Opportunities for Shenzhen RoadRover and Xinya Electronic

0.12

Correlation Coefficient

Shenzhen RoadRover  Xinya Electronic

Average diversification

The 3 months correlation between Shenzhen and Xinya is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen RoadRover Technology and Xinya Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinya Electronic and Shenzhen RoadRover 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 Shenzhen RoadRover Technology are associated (or correlated) with Xinya Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinya Electronic has no effect on the direction of Shenzhen RoadRover i.e., Shenzhen RoadRover and Xinya Electronic go up and down completely randomly.

Pair Corralation between Shenzhen RoadRover and Xinya Electronic

Assuming the 90 days trading horizon Shenzhen RoadRover is expected to generate 2.77 times less return on investment than Xinya Electronic. But when comparing it to its historical volatility, Shenzhen RoadRover Technology is 2.03 times less risky than Xinya Electronic. It trades about 0.03 of its potential returns per unit of risk. Xinya Electronic Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,577  in Xinya Electronic Co on December 25, 2024 and sell it today you would earn a total of  53.00  from holding Xinya Electronic Co or generate 3.36% return on investment over 90 days.

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

Shenzhen RoadRover Technology  vs.  Xinya Electronic Co

Shenzhen RoadRover

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen RoadRover Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shenzhen RoadRover is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xinya Electronic

Risk-Adjusted Performance

Weak

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

Pair Trading with Shenzhen RoadRover and Xinya Electronic

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

The idea behind Shenzhen RoadRover Technology and Xinya Electronic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.