Correlation Between Xiwang Special and OSRAM LICHT

Can any of the company-specific risk be diversified away by investing in both Xiwang Special and OSRAM LICHT 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 OSRAM LICHT 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 OSRAM LICHT N, you can compare the effects of market volatilities on Xiwang Special and OSRAM LICHT 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 OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiwang Special and OSRAM LICHT.

Diversification Opportunities for Xiwang Special and OSRAM LICHT

0.0

Correlation Coefficient

Xiwang Special  OSRAM LICHT

Pay attention - limited upside

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

Pair Corralation between Xiwang Special and OSRAM LICHT

Assuming the 90 days horizon Xiwang Special Steel is expected to generate 220.66 times more return on investment than OSRAM LICHT. However, Xiwang Special is 220.66 times more volatile than OSRAM LICHT N. It trades about 0.09 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.04 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.  OSRAM LICHT N

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.

OSRAM LICHT N

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OSRAM LICHT N are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, OSRAM LICHT is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Xiwang Special and OSRAM LICHT

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

The idea behind Xiwang Special Steel and OSRAM LICHT N 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.