Correlation Between Guilin Seamild and Xinjiang Daqo

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

By analyzing existing cross correlation between Guilin Seamild Foods and Xinjiang Daqo New, you can compare the effects of market volatilities on Guilin Seamild and Xinjiang Daqo 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 Guilin Seamild with a short position of Xinjiang Daqo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guilin Seamild and Xinjiang Daqo.

Diversification Opportunities for Guilin Seamild and Xinjiang Daqo

0.0

Correlation Coefficient

Guilin Seamild  Xinjiang Daqo

Pay attention - limited upside

The 3 months correlation between Guilin and Xinjiang is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Guilin Seamild Foods and Xinjiang Daqo New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Daqo New and Guilin Seamild 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 Guilin Seamild Foods are associated (or correlated) with Xinjiang Daqo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Daqo New has no effect on the direction of Guilin Seamild i.e., Guilin Seamild and Xinjiang Daqo go up and down completely randomly.

Pair Corralation between Guilin Seamild and Xinjiang Daqo

If you would invest  1,253  in Guilin Seamild Foods on October 13, 2024 and sell it today you would earn a total of  268.00  from holding Guilin Seamild Foods or generate 21.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Guilin Seamild Foods  vs.  Xinjiang Daqo New

Guilin Seamild Foods

Risk-Adjusted Performance

9 of 100

OK

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

Xinjiang Daqo New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xinjiang Daqo New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xinjiang Daqo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guilin Seamild and Xinjiang Daqo

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

The idea behind Guilin Seamild Foods and Xinjiang Daqo New 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.