Correlation Between Xinke Material and Jiugui Liquor

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

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

Diversification Opportunities for Xinke Material and Jiugui Liquor

0.52

Correlation Coefficient

Xinke Material  Jiugui Liquor

Very weak diversification

The 3 months correlation between Xinke and Jiugui is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xinke Material and Jiugui Liquor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiugui Liquor 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 Jiugui Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiugui Liquor has no effect on the direction of Xinke Material i.e., Xinke Material and Jiugui Liquor go up and down completely randomly.

Pair Corralation between Xinke Material and Jiugui Liquor

Assuming the 90 days trading horizon Xinke Material is expected to generate 1.04 times more return on investment than Jiugui Liquor. However, Xinke Material is 1.04 times more volatile than Jiugui Liquor Co. It trades about 0.04 of its potential returns per unit of risk. Jiugui Liquor Co is currently generating about -0.06 per unit of risk. If you would invest  266.00  in Xinke Material on September 26, 2024 and sell it today you would earn a total of  120.00  from holding Xinke Material or generate 45.11% return on investment over 90 days.

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

Xinke Material  vs.  Jiugui Liquor Co

Xinke Material

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xinke Material are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinke Material sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiugui Liquor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiugui Liquor Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jiugui Liquor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinke Material and Jiugui Liquor

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

The idea behind Xinke Material and Jiugui Liquor 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.