Correlation Between Xinjiang Tianrun and Industrial Bank

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

By analyzing existing cross correlation between Xinjiang Tianrun Dairy and Industrial Bank Co, you can compare the effects of market volatilities on Xinjiang Tianrun and Industrial Bank 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 Xinjiang Tianrun with a short position of Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Tianrun and Industrial Bank.

Diversification Opportunities for Xinjiang Tianrun and Industrial Bank

-0.55

Correlation Coefficient

Xinjiang Tianrun  Industrial Bank

Excellent diversification

The 3 months correlation between Xinjiang and Industrial is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Tianrun Dairy and Industrial Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank and Xinjiang Tianrun 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 Xinjiang Tianrun Dairy are associated (or correlated) with Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Xinjiang Tianrun i.e., Xinjiang Tianrun and Industrial Bank go up and down completely randomly.

Pair Corralation between Xinjiang Tianrun and Industrial Bank

Assuming the 90 days trading horizon Xinjiang Tianrun Dairy is expected to under-perform the Industrial Bank. In addition to that, Xinjiang Tianrun is 1.62 times more volatile than Industrial Bank Co. It trades about -0.05 of its total potential returns per unit of risk. Industrial Bank Co is currently generating about 0.04 per unit of volatility. If you would invest  1,628  in Industrial Bank Co on October 23, 2024 and sell it today you would earn a total of  360.00  from holding Industrial Bank Co or generate 22.11% return on investment over 90 days.

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

Xinjiang Tianrun Dairy  vs.  Industrial Bank Co

Xinjiang Tianrun Dairy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Tianrun Dairy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Tianrun may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Industrial Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Bank Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Industrial Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xinjiang Tianrun and Industrial Bank

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

The idea behind Xinjiang Tianrun Dairy and Industrial Bank 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.