Correlation Between CSG Holding and Xingyuan Environment

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

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

Diversification Opportunities for CSG Holding and Xingyuan Environment

-0.5

Correlation Coefficient

CSG Holding  Xingyuan Environment

Very good diversification

The 3 months correlation between CSG and Xingyuan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding CSG Holding Co and Xingyuan Environment Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingyuan Environment and CSG Holding 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 CSG Holding Co are associated (or correlated) with Xingyuan Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingyuan Environment has no effect on the direction of CSG Holding i.e., CSG Holding and Xingyuan Environment go up and down completely randomly.

Pair Corralation between CSG Holding and Xingyuan Environment

Assuming the 90 days trading horizon CSG Holding Co is expected to under-perform the Xingyuan Environment. But the stock apears to be less risky and, when comparing its historical volatility, CSG Holding Co is 6.69 times less risky than Xingyuan Environment. The stock trades about -0.27 of its potential returns per unit of risk. The Xingyuan Environment Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Xingyuan Environment Technology on October 6, 2024 and sell it today you would lose (41.00) from holding Xingyuan Environment Technology or give up 13.85% of portfolio value over 90 days.

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

CSG Holding Co  vs.  Xingyuan Environment Technolog

CSG Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSG Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xingyuan Environment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xingyuan Environment Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xingyuan Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSG Holding and Xingyuan Environment

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

The idea behind CSG Holding Co and Xingyuan Environment Technology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.