Correlation Between Runjian Communication and Xingguang Agricultural

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

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

Diversification Opportunities for Runjian Communication and Xingguang Agricultural

0.31

Correlation Coefficient

Runjian Communication  Xingguang Agricultural

Weak diversification

The 3 months correlation between Runjian and Xingguang is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Runjian Communication Co and Xingguang Agricultural Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingguang Agricultural and Runjian Communication 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 Runjian Communication Co are associated (or correlated) with Xingguang Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingguang Agricultural has no effect on the direction of Runjian Communication i.e., Runjian Communication and Xingguang Agricultural go up and down completely randomly.

Pair Corralation between Runjian Communication and Xingguang Agricultural

Assuming the 90 days trading horizon Runjian Communication Co is expected to generate 1.0 times more return on investment than Xingguang Agricultural. However, Runjian Communication is 1.0 times more volatile than Xingguang Agricultural Mach. It trades about 0.16 of its potential returns per unit of risk. Xingguang Agricultural Mach is currently generating about -0.03 per unit of risk. If you would invest  3,488  in Runjian Communication Co on December 26, 2024 and sell it today you would earn a total of  1,729  from holding Runjian Communication Co or generate 49.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Runjian Communication Co  vs.  Xingguang Agricultural Mach

Runjian Communication

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Runjian Communication Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Runjian Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Xingguang Agricultural

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xingguang Agricultural Mach 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 Runjian Communication and Xingguang Agricultural

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

The idea behind Runjian Communication Co and Xingguang Agricultural Mach 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.