Correlation Between Xiamen ITG and GalaxyCore

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

By analyzing existing cross correlation between Xiamen ITG Group and GalaxyCore, you can compare the effects of market volatilities on Xiamen ITG and GalaxyCore 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 Xiamen ITG with a short position of GalaxyCore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiamen ITG and GalaxyCore.

Diversification Opportunities for Xiamen ITG and GalaxyCore

0.8

Correlation Coefficient

Xiamen ITG  GalaxyCore

Very poor diversification

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

Pair Corralation between Xiamen ITG and GalaxyCore

Assuming the 90 days trading horizon Xiamen ITG Group is expected to generate 0.56 times more return on investment than GalaxyCore. However, Xiamen ITG Group is 1.77 times less risky than GalaxyCore. It trades about -0.08 of its potential returns per unit of risk. GalaxyCore is currently generating about -0.12 per unit of risk. If you would invest  680.00  in Xiamen ITG Group on September 22, 2024 and sell it today you would lose (17.00) from holding Xiamen ITG Group or give up 2.5% of portfolio value over 90 days.

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

Xiamen ITG Group  vs.  GalaxyCore

Xiamen ITG Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen ITG Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen ITG sustained solid returns over the last few months and may actually be approaching a breakup point.

GalaxyCore

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GalaxyCore are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GalaxyCore sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xiamen ITG and GalaxyCore

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

The idea behind Xiamen ITG Group and GalaxyCore 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.