Correlation Between Shandong Rike and Xiangpiaopiao Food

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

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

Diversification Opportunities for Shandong Rike and Xiangpiaopiao Food

-0.46

Correlation Coefficient

Shandong Rike  Xiangpiaopiao Food

Very good diversification

The 3 months correlation between Shandong and Xiangpiaopiao is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Rike Chemical and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food and Shandong Rike 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 Shandong Rike Chemical are associated (or correlated) with Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Shandong Rike i.e., Shandong Rike and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Shandong Rike and Xiangpiaopiao Food

Assuming the 90 days trading horizon Shandong Rike Chemical is expected to generate 1.69 times more return on investment than Xiangpiaopiao Food. However, Shandong Rike is 1.69 times more volatile than Xiangpiaopiao Food Co. It trades about 0.06 of its potential returns per unit of risk. Xiangpiaopiao Food Co is currently generating about -0.08 per unit of risk. If you would invest  590.00  in Shandong Rike Chemical on December 28, 2024 and sell it today you would earn a total of  72.00  from holding Shandong Rike Chemical or generate 12.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Shandong Rike Chemical  vs.  Xiangpiaopiao Food Co

Shandong Rike Chemical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Rike Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Rike sustained solid returns over the last few months and may actually be approaching a breakup point.

Xiangpiaopiao Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xiangpiaopiao Food 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shandong Rike and Xiangpiaopiao Food

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

The idea behind Shandong Rike Chemical and Xiangpiaopiao Food 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.