Correlation Between Shandong Publishing and Xinke Material

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

By analyzing existing cross correlation between Shandong Publishing Media and Xinke Material, you can compare the effects of market volatilities on Shandong Publishing and Xinke Material 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 Shandong Publishing with a short position of Xinke Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Publishing and Xinke Material.

Diversification Opportunities for Shandong Publishing and Xinke Material

-0.12

Correlation Coefficient

Shandong Publishing  Xinke Material

Good diversification

The 3 months correlation between Shandong and Xinke is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Publishing Media and Xinke Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinke Material and Shandong Publishing 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 Shandong Publishing Media are associated (or correlated) with Xinke Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinke Material has no effect on the direction of Shandong Publishing i.e., Shandong Publishing and Xinke Material go up and down completely randomly.

Pair Corralation between Shandong Publishing and Xinke Material

Assuming the 90 days trading horizon Shandong Publishing Media is expected to under-perform the Xinke Material. But the stock apears to be less risky and, when comparing its historical volatility, Shandong Publishing Media is 2.69 times less risky than Xinke Material. The stock trades about -0.14 of its potential returns per unit of risk. The Xinke Material is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  389.00  in Xinke Material on December 25, 2024 and sell it today you would lose (13.00) from holding Xinke Material or give up 3.34% of portfolio value over 90 days.

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

Shandong Publishing Media  vs.  Xinke Material

Shandong Publishing Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Publishing Media 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.

Xinke Material

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinke Material has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Xinke Material is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shandong Publishing and Xinke Material

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

The idea behind Shandong Publishing Media and Xinke Material 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.