Correlation Between Xingyuan Environment and Biwin Storage

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

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

Diversification Opportunities for Xingyuan Environment and Biwin Storage

-0.07

Correlation Coefficient

Xingyuan Environment  Biwin Storage

Good diversification

The 3 months correlation between Xingyuan and Biwin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Xingyuan Environment Technolog and Biwin Storage Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biwin Storage Technology and Xingyuan Environment 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 Xingyuan Environment Technology are associated (or correlated) with Biwin Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biwin Storage Technology has no effect on the direction of Xingyuan Environment i.e., Xingyuan Environment and Biwin Storage go up and down completely randomly.

Pair Corralation between Xingyuan Environment and Biwin Storage

Assuming the 90 days trading horizon Xingyuan Environment Technology is expected to under-perform the Biwin Storage. In addition to that, Xingyuan Environment is 1.07 times more volatile than Biwin Storage Technology. It trades about -0.42 of its total potential returns per unit of risk. Biwin Storage Technology is currently generating about 0.02 per unit of volatility. If you would invest  5,829  in Biwin Storage Technology on October 9, 2024 and sell it today you would earn a total of  31.00  from holding Biwin Storage Technology or generate 0.53% return on investment over 90 days.

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

Xingyuan Environment Technolog  vs.  Biwin Storage Technology

Xingyuan Environment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xingyuan Environment Technology are ranked lower than 4 (%) 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.

Biwin Storage Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biwin Storage Technology 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.

Pair Trading with Xingyuan Environment and Biwin Storage

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

The idea behind Xingyuan Environment Technology and Biwin Storage 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.