Correlation Between Xiaomi and Kyocera

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

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

Diversification Opportunities for Xiaomi and Kyocera

-0.87

Correlation Coefficient

Xiaomi  Kyocera

Pay attention - limited upside

The 3 months correlation between Xiaomi and Kyocera is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi and Kyocera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyocera and Xiaomi 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 Xiaomi are associated (or correlated) with Kyocera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyocera has no effect on the direction of Xiaomi i.e., Xiaomi and Kyocera go up and down completely randomly.

Pair Corralation between Xiaomi and Kyocera

Assuming the 90 days horizon Xiaomi is expected to generate 1.24 times more return on investment than Kyocera. However, Xiaomi is 1.24 times more volatile than Kyocera. It trades about 0.22 of its potential returns per unit of risk. Kyocera is currently generating about -0.15 per unit of risk. If you would invest  222.00  in Xiaomi on August 31, 2024 and sell it today you would earn a total of  115.00  from holding Xiaomi or generate 51.8% return on investment over 90 days.

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

Xiaomi  vs.  Kyocera

Xiaomi

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xiaomi are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xiaomi reported solid returns over the last few months and may actually be approaching a breakup point.

Kyocera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyocera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Xiaomi and Kyocera

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

The idea behind Xiaomi and Kyocera 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.