Correlation Between Xilinmen Furniture and Thinkingdom Media

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

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

Diversification Opportunities for Xilinmen Furniture and Thinkingdom Media

0.22

Correlation Coefficient

Xilinmen Furniture  Thinkingdom Media

Modest diversification

The 3 months correlation between Xilinmen and Thinkingdom is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Xilinmen Furniture Co and Thinkingdom Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkingdom Media and Xilinmen Furniture 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 Xilinmen Furniture Co are associated (or correlated) with Thinkingdom Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkingdom Media has no effect on the direction of Xilinmen Furniture i.e., Xilinmen Furniture and Thinkingdom Media go up and down completely randomly.

Pair Corralation between Xilinmen Furniture and Thinkingdom Media

Assuming the 90 days trading horizon Xilinmen Furniture Co is expected to generate 0.64 times more return on investment than Thinkingdom Media. However, Xilinmen Furniture Co is 1.57 times less risky than Thinkingdom Media. It trades about -0.11 of its potential returns per unit of risk. Thinkingdom Media Group is currently generating about -0.09 per unit of risk. If you would invest  1,956  in Xilinmen Furniture Co on December 2, 2024 and sell it today you would lose (241.00) from holding Xilinmen Furniture Co or give up 12.32% of portfolio value over 90 days.

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

Xilinmen Furniture Co  vs.  Thinkingdom Media Group

Xilinmen Furniture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xilinmen Furniture Co 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.

Thinkingdom Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thinkingdom Media Group 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.

Pair Trading with Xilinmen Furniture and Thinkingdom Media

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

The idea behind Xilinmen Furniture Co and Thinkingdom Media Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.