Correlation Between XiaMen HongXin and CITIC Metal

Can any of the company-specific risk be diversified away by investing in both XiaMen HongXin and CITIC Metal 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 XiaMen HongXin and CITIC Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XiaMen HongXin Electron tech and CITIC Metal Co, you can compare the effects of market volatilities on XiaMen HongXin and CITIC Metal 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 XiaMen HongXin with a short position of CITIC Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of XiaMen HongXin and CITIC Metal.

Diversification Opportunities for XiaMen HongXin and CITIC Metal

-0.12

Correlation Coefficient

XiaMen HongXin  CITIC Metal

Good diversification

The 3 months correlation between XiaMen and CITIC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding XiaMen HongXin Electron tech and CITIC Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Metal and XiaMen HongXin 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 XiaMen HongXin Electron tech are associated (or correlated) with CITIC Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Metal has no effect on the direction of XiaMen HongXin i.e., XiaMen HongXin and CITIC Metal go up and down completely randomly.

Pair Corralation between XiaMen HongXin and CITIC Metal

Assuming the 90 days trading horizon XiaMen HongXin Electron tech is expected to generate 1.68 times more return on investment than CITIC Metal. However, XiaMen HongXin is 1.68 times more volatile than CITIC Metal Co. It trades about 0.05 of its potential returns per unit of risk. CITIC Metal Co is currently generating about -0.03 per unit of risk. If you would invest  1,143  in XiaMen HongXin Electron tech on October 10, 2024 and sell it today you would earn a total of  866.00  from holding XiaMen HongXin Electron tech or generate 75.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.29%
Values	Daily Returns

XiaMen HongXin Electron tech  vs.  CITIC Metal Co

XiaMen HongXin Electron

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XiaMen HongXin Electron tech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, XiaMen HongXin sustained solid returns over the last few months and may actually be approaching a breakup point.

CITIC Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITIC Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with XiaMen HongXin and CITIC Metal

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

The idea behind XiaMen HongXin Electron tech and CITIC Metal 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.