Correlation Between Xinke Material and Sportsoul

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

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

Diversification Opportunities for Xinke Material and Sportsoul

-0.65

Correlation Coefficient

Xinke Material  Sportsoul

Excellent diversification

The 3 months correlation between Xinke and Sportsoul is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Xinke Material and Sportsoul Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsoul 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 Sportsoul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsoul has no effect on the direction of Xinke Material i.e., Xinke Material and Sportsoul go up and down completely randomly.

Pair Corralation between Xinke Material and Sportsoul

Assuming the 90 days trading horizon Xinke Material is expected to generate 1.9 times more return on investment than Sportsoul. However, Xinke Material is 1.9 times more volatile than Sportsoul Co Ltd. It trades about 0.16 of its potential returns per unit of risk. Sportsoul Co Ltd is currently generating about -0.14 per unit of risk. If you would invest  248.00  in Xinke Material on December 2, 2024 and sell it today you would earn a total of  138.00  from holding Xinke Material or generate 55.65% return on investment over 90 days.

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

Xinke Material  vs.  Sportsoul Co Ltd

Xinke Material

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xinke Material are ranked lower than 12 (%) 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.

Sportsoul

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sportsoul Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Xinke Material and Sportsoul

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

The idea behind Xinke Material and Sportsoul Co Ltd 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.