Correlation Between Xintec and Otsuka Information

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

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

Diversification Opportunities for Xintec and Otsuka Information

-0.74

Correlation Coefficient

Xintec  Otsuka Information

Pay attention - limited upside

The 3 months correlation between Xintec and Otsuka is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Xintec and Otsuka Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka Information and Xintec 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 Xintec are associated (or correlated) with Otsuka Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka Information has no effect on the direction of Xintec i.e., Xintec and Otsuka Information go up and down completely randomly.

Pair Corralation between Xintec and Otsuka Information

Assuming the 90 days trading horizon Xintec is expected to generate 0.79 times more return on investment than Otsuka Information. However, Xintec is 1.26 times less risky than Otsuka Information. It trades about -0.16 of its potential returns per unit of risk. Otsuka Information Technology is currently generating about -0.13 per unit of risk. If you would invest  20,400  in Xintec on October 8, 2024 and sell it today you would lose (1,050) from holding Xintec or give up 5.15% of portfolio value over 90 days.

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

Xintec  vs.  Otsuka Information Technology

Xintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xintec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Otsuka Information

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Otsuka Information Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Otsuka Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xintec and Otsuka Information

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

The idea behind Xintec and Otsuka Information 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.