Correlation Between Bank of Suzhou and Xilinmen Furniture

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bank of Suzhou and Xilinmen Furniture 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 Bank of Suzhou and Xilinmen Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Suzhou and Xilinmen Furniture Co, you can compare the effects of market volatilities on Bank of Suzhou and Xilinmen Furniture 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 Bank of Suzhou with a short position of Xilinmen Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Suzhou and Xilinmen Furniture.

Diversification Opportunities for Bank of Suzhou and Xilinmen Furniture

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Bank and Xilinmen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Suzhou and Xilinmen Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xilinmen Furniture and Bank of Suzhou 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 Bank of Suzhou are associated (or correlated) with Xilinmen Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xilinmen Furniture has no effect on the direction of Bank of Suzhou i.e., Bank of Suzhou and Xilinmen Furniture go up and down completely randomly.

Pair Corralation between Bank of Suzhou and Xilinmen Furniture

Assuming the 90 days trading horizon Bank of Suzhou is expected to generate 0.55 times more return on investment than Xilinmen Furniture. However, Bank of Suzhou is 1.81 times less risky than Xilinmen Furniture. It trades about 0.04 of its potential returns per unit of risk. Xilinmen Furniture Co is currently generating about -0.03 per unit of risk. If you would invest  788.00  in Bank of Suzhou on September 30, 2024 and sell it today you would earn a total of  22.00  from holding Bank of Suzhou or generate 2.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Bank of Suzhou  vs.  Xilinmen Furniture Co

 Performance 
       Timeline  
Bank of Suzhou 

Risk-Adjusted Performance

2 of 100

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

Risk-Adjusted Performance

0 of 100

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

Bank of Suzhou and Xilinmen Furniture Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank of Suzhou and Xilinmen Furniture

The main advantage of trading using opposite Bank of Suzhou and Xilinmen Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Suzhou position performs unexpectedly, Xilinmen Furniture 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 Xilinmen Furniture will offset losses from the drop in Xilinmen Furniture's long position.
The idea behind Bank of Suzhou and Xilinmen Furniture 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

Other Complementary Tools

Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios