Correlation Between Xinjiang Baodi and State Grid

Can any of the company-specific risk be diversified away by investing in both Xinjiang Baodi and State Grid 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 State Grid 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 State Grid InformationCommunication, you can compare the effects of market volatilities on Xinjiang Baodi and State Grid 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 State Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Baodi and State Grid.

Diversification Opportunities for Xinjiang Baodi and State Grid

0.7

Correlation Coefficient

Xinjiang Baodi  State Grid

Poor diversification

The 3 months correlation between Xinjiang and State is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and State Grid InformationCommunic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Grid Informati 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 State Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Grid Informati has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and State Grid go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and State Grid

Assuming the 90 days trading horizon Xinjiang Baodi Mining is expected to generate 0.59 times more return on investment than State Grid. However, Xinjiang Baodi Mining is 1.7 times less risky than State Grid. It trades about 0.09 of its potential returns per unit of risk. State Grid InformationCommunication is currently generating about -0.06 per unit of risk. If you would invest  659.00  in Xinjiang Baodi Mining on September 27, 2024 and sell it today you would earn a total of  21.00  from holding Xinjiang Baodi Mining or generate 3.19% return on investment over 90 days.

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

Xinjiang Baodi Mining  vs.  State Grid InformationCommunic

Xinjiang Baodi Mining

Risk-Adjusted Performance

7 of 100

OK

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

State Grid Informati

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Xinjiang Baodi and State Grid

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

The idea behind Xinjiang Baodi Mining and State Grid InformationCommunication 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.