Correlation Between Xinke Material and Marssenger Kitchenware

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

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

Diversification Opportunities for Xinke Material and Marssenger Kitchenware

0.8

Correlation Coefficient

Xinke Material  Marssenger Kitchenware

Very poor diversification

The 3 months correlation between Xinke and Marssenger is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xinke Material and Marssenger Kitchenware Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marssenger Kitchenware 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 Marssenger Kitchenware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marssenger Kitchenware has no effect on the direction of Xinke Material i.e., Xinke Material and Marssenger Kitchenware go up and down completely randomly.

Pair Corralation between Xinke Material and Marssenger Kitchenware

Assuming the 90 days trading horizon Xinke Material is expected to generate 0.68 times more return on investment than Marssenger Kitchenware. However, Xinke Material is 1.47 times less risky than Marssenger Kitchenware. It trades about 0.27 of its potential returns per unit of risk. Marssenger Kitchenware Co is currently generating about 0.18 per unit of risk. If you would invest  170.00  in Xinke Material on September 12, 2024 and sell it today you would earn a total of  103.00  from holding Xinke Material or generate 60.59% return on investment over 90 days.

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

Xinke Material  vs.  Marssenger Kitchenware Co

Xinke Material

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xinke Material are ranked lower than 21 (%) 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.

Marssenger Kitchenware

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marssenger Kitchenware Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marssenger Kitchenware sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinke Material and Marssenger Kitchenware

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

The idea behind Xinke Material and Marssenger Kitchenware 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.