Correlation Between Harvest Fund and Xilong Chemical

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

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

Diversification Opportunities for Harvest Fund and Xilong Chemical

-0.23

Correlation Coefficient

Harvest Fund  Xilong Chemical

Very good diversification

The 3 months correlation between Harvest and Xilong is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Fund Management and Xilong Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xilong Chemical and Harvest Fund 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 Harvest Fund Management are associated (or correlated) with Xilong Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xilong Chemical has no effect on the direction of Harvest Fund i.e., Harvest Fund and Xilong Chemical go up and down completely randomly.

Pair Corralation between Harvest Fund and Xilong Chemical

Assuming the 90 days trading horizon Harvest Fund Management is expected to generate 0.52 times more return on investment than Xilong Chemical. However, Harvest Fund Management is 1.93 times less risky than Xilong Chemical. It trades about 0.65 of its potential returns per unit of risk. Xilong Chemical Co is currently generating about -0.1 per unit of risk. If you would invest  260.00  in Harvest Fund Management on October 11, 2024 and sell it today you would earn a total of  72.00  from holding Harvest Fund Management or generate 27.69% return on investment over 90 days.

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

Harvest Fund Management  vs.  Xilong Chemical Co

Harvest Fund Management

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Fund Management are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harvest Fund sustained solid returns over the last few months and may actually be approaching a breakup point.

Xilong Chemical

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Harvest Fund and Xilong Chemical

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

The idea behind Harvest Fund Management and Xilong Chemical 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.