Correlation Between Chengdu Xuguang and 5I5j Holding

Can any of the company-specific risk be diversified away by investing in both Chengdu Xuguang and 5I5j Holding 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 Chengdu Xuguang and 5I5j Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chengdu Xuguang Electronics and 5I5j Holding Group, you can compare the effects of market volatilities on Chengdu Xuguang and 5I5j Holding 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 Chengdu Xuguang with a short position of 5I5j Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xuguang and 5I5j Holding.

Diversification Opportunities for Chengdu Xuguang and 5I5j Holding

0.52

Correlation Coefficient

Chengdu Xuguang  5I5j Holding

Very weak diversification

The 3 months correlation between Chengdu and 5I5j is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xuguang Electronics and 5I5j Holding Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5I5j Holding Group and Chengdu Xuguang 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 Chengdu Xuguang Electronics are associated (or correlated) with 5I5j Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5I5j Holding Group has no effect on the direction of Chengdu Xuguang i.e., Chengdu Xuguang and 5I5j Holding go up and down completely randomly.

Pair Corralation between Chengdu Xuguang and 5I5j Holding

Assuming the 90 days trading horizon Chengdu Xuguang Electronics is expected to under-perform the 5I5j Holding. But the stock apears to be less risky and, when comparing its historical volatility, Chengdu Xuguang Electronics is 1.23 times less risky than 5I5j Holding. The stock trades about -0.01 of its potential returns per unit of risk. The 5I5j Holding Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  272.00  in 5I5j Holding Group on October 4, 2024 and sell it today you would earn a total of  33.00  from holding 5I5j Holding Group or generate 12.13% return on investment over 90 days.

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

Chengdu Xuguang Electronics  vs.  5I5j Holding Group

Chengdu Xuguang Elec

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chengdu Xuguang Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengdu Xuguang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

5I5j Holding Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5I5j Holding Group 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chengdu Xuguang and 5I5j Holding

The main advantage of trading using opposite Chengdu Xuguang and 5I5j Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Xuguang position performs unexpectedly, 5I5j Holding 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 5I5j Holding will offset losses from the drop in 5I5j Holding's long position.

The idea behind Chengdu Xuguang Electronics and 5I5j Holding Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..