Correlation Between Xiwang Special and Mount Gibson

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

By analyzing existing cross correlation between Xiwang Special Steel and Mount Gibson Iron, you can compare the effects of market volatilities on Xiwang Special and Mount Gibson 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 Xiwang Special with a short position of Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiwang Special and Mount Gibson.

Diversification Opportunities for Xiwang Special and Mount Gibson

0.0

Correlation Coefficient

Xiwang Special  Mount Gibson

Pay attention - limited upside

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

Pair Corralation between Xiwang Special and Mount Gibson

Assuming the 90 days horizon Xiwang Special Steel is expected to generate 19.08 times more return on investment than Mount Gibson. However, Xiwang Special is 19.08 times more volatile than Mount Gibson Iron. It trades about 0.09 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about -0.01 per unit of risk. If you would invest  1.13  in Xiwang Special Steel on October 10, 2024 and sell it today you would lose (1.12) from holding Xiwang Special Steel or give up 99.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Xiwang Special Steel  vs.  Mount Gibson Iron

Xiwang Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xiwang Special Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xiwang Special is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mount Gibson Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Gibson Iron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Xiwang Special and Mount Gibson

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

The idea behind Xiwang Special Steel and Mount Gibson Iron 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.