Correlation Between Chaheng Precision and Xintec

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

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

Diversification Opportunities for Chaheng Precision and Xintec

0.04

Correlation Coefficient

Chaheng Precision  Xintec

Significant diversification

The 3 months correlation between Chaheng and Xintec is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chaheng Precision Co and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and Chaheng Precision 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 Chaheng Precision Co 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 Chaheng Precision i.e., Chaheng Precision and Xintec go up and down completely randomly.

Pair Corralation between Chaheng Precision and Xintec

Assuming the 90 days trading horizon Chaheng Precision is expected to generate 2.62 times less return on investment than Xintec. But when comparing it to its historical volatility, Chaheng Precision Co is 1.29 times less risky than Xintec. It trades about 0.04 of its potential returns per unit of risk. Xintec is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,446  in Xintec on September 22, 2024 and sell it today you would earn a total of  10,954  from holding Xintec or generate 115.96% return on investment over 90 days.

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

Chaheng Precision Co  vs.  Xintec

Chaheng Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chaheng Precision Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chaheng Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chaheng Precision and Xintec

The main advantage of trading using opposite Chaheng Precision and Xintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaheng Precision 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 Chaheng Precision Co 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.