Correlation Between Xinjiang Baodi and Double Medical

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

By analyzing existing cross correlation between Xinjiang Baodi Mining and Double Medical Technology, you can compare the effects of market volatilities on Xinjiang Baodi and Double Medical 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 Baodi with a short position of Double Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Baodi and Double Medical.

Diversification Opportunities for Xinjiang Baodi and Double Medical

-0.35

Correlation Coefficient

Xinjiang Baodi  Double Medical

Very good diversification

The 3 months correlation between Xinjiang and Double is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and Double Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Medical Technology and Xinjiang Baodi 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 Baodi Mining are associated (or correlated) with Double Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Medical Technology has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and Double Medical go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Double Medical

Assuming the 90 days trading horizon Xinjiang Baodi is expected to generate 1.66 times less return on investment than Double Medical. But when comparing it to its historical volatility, Xinjiang Baodi Mining is 1.15 times less risky than Double Medical. It trades about 0.05 of its potential returns per unit of risk. Double Medical Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,470  in Double Medical Technology on October 8, 2024 and sell it today you would earn a total of  500.00  from holding Double Medical Technology or generate 20.24% return on investment over 90 days.

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

Xinjiang Baodi Mining  vs.  Double Medical Technology

Xinjiang Baodi Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Double Medical Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Double Medical Technology 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 Xinjiang Baodi and Double Medical

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

The idea behind Xinjiang Baodi Mining and Double Medical Technology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.