Correlation Between Xinke Material and China Vanke

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

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

Diversification Opportunities for Xinke Material and China Vanke

-0.1

Correlation Coefficient

Xinke Material  China Vanke

Good diversification

The 3 months correlation between Xinke and China is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Xinke Material and China Vanke Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Vanke and Xinke Material 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 Xinke Material are associated (or correlated) with China Vanke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Vanke has no effect on the direction of Xinke Material i.e., Xinke Material and China Vanke go up and down completely randomly.

Pair Corralation between Xinke Material and China Vanke

Assuming the 90 days trading horizon Xinke Material is expected to generate 1.77 times more return on investment than China Vanke. However, Xinke Material is 1.77 times more volatile than China Vanke Co. It trades about 0.02 of its potential returns per unit of risk. China Vanke Co is currently generating about -0.02 per unit of risk. If you would invest  386.00  in Xinke Material on December 24, 2024 and sell it today you would earn a total of  0.00  from holding Xinke Material or generate 0.0% return on investment over 90 days.

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

Xinke Material  vs.  China Vanke Co

Xinke Material

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xinke Material are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinke Material may actually be approaching a critical reversion point that can send shares even higher in April 2025.

China Vanke

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Vanke Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China Vanke is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xinke Material and China Vanke

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

The idea behind Xinke Material and China Vanke 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.