Correlation Between Otsuka Information and Xintec

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

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

Diversification Opportunities for Otsuka Information and Xintec

-0.74

Correlation Coefficient

Otsuka Information  Xintec

Pay attention - limited upside

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

Pair Corralation between Otsuka Information and Xintec

Assuming the 90 days trading horizon Otsuka Information Technology is expected to under-perform the Xintec. In addition to that, Otsuka Information is 1.26 times more volatile than Xintec. It trades about -0.13 of its total potential returns per unit of risk. Xintec is currently generating about -0.16 per unit of volatility. 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

Otsuka Information Technology  vs.  Xintec

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.

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.

Pair Trading with Otsuka Information and Xintec

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

The idea behind Otsuka Information Technology and Xintec 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.