Correlation Between Oceanic Beverages and Xintec

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

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

Diversification Opportunities for Oceanic Beverages and Xintec

-0.22

Correlation Coefficient

Oceanic Beverages  Xintec

Very good diversification

The 3 months correlation between Oceanic and Xintec is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Beverages Co and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and Oceanic Beverages 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 Oceanic Beverages Co are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Oceanic Beverages i.e., Oceanic Beverages and Xintec go up and down completely randomly.

Pair Corralation between Oceanic Beverages and Xintec

Assuming the 90 days trading horizon Oceanic Beverages Co is expected to generate about the same return on investment as Xintec. But, Oceanic Beverages Co is 1.21 times less risky than Xintec. It trades about 0.08 of its potential returns per unit of risk. Xintec is currently generating about 0.07 per unit of risk. If you would invest  10,238  in Xintec on October 9, 2024 and sell it today you would earn a total of  10,012  from holding Xintec or generate 97.79% return on investment over 90 days.

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

Oceanic Beverages Co  vs.  Xintec

Oceanic Beverages

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oceanic Beverages Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oceanic Beverages showed solid returns over the last few months and may actually be approaching a breakup point.

Xintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xintec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Oceanic Beverages and Xintec

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

The idea behind Oceanic Beverages Co and Xintec 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.