Correlation Between Shengtak New and Xinya Electronic

Can any of the company-specific risk be diversified away by investing in both Shengtak New and Xinya Electronic 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 Shengtak New and Xinya Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shengtak New Material and Xinya Electronic Co, you can compare the effects of market volatilities on Shengtak New and Xinya Electronic 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 Shengtak New with a short position of Xinya Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shengtak New and Xinya Electronic.

Diversification Opportunities for Shengtak New and Xinya Electronic

-0.27

Correlation Coefficient

Shengtak New  Xinya Electronic

Very good diversification

The 3 months correlation between Shengtak and Xinya is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shengtak New Material and Xinya Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinya Electronic and Shengtak New 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 Shengtak New Material are associated (or correlated) with Xinya Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinya Electronic has no effect on the direction of Shengtak New i.e., Shengtak New and Xinya Electronic go up and down completely randomly.

Pair Corralation between Shengtak New and Xinya Electronic

Assuming the 90 days trading horizon Shengtak New is expected to generate 4.41 times less return on investment than Xinya Electronic. In addition to that, Shengtak New is 1.02 times more volatile than Xinya Electronic Co. It trades about 0.01 of its total potential returns per unit of risk. Xinya Electronic Co is currently generating about 0.04 per unit of volatility. If you would invest  974.00  in Xinya Electronic Co on October 15, 2024 and sell it today you would earn a total of  461.00  from holding Xinya Electronic Co or generate 47.33% return on investment over 90 days.

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

Shengtak New Material  vs.  Xinya Electronic Co

Shengtak New Material

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shengtak New Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shengtak New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xinya Electronic

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Shengtak New and Xinya Electronic

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

The idea behind Shengtak New Material and Xinya Electronic 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.