Correlation Between Xiamen Goldenhome and Chengdu B

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Can any of the company-specific risk be diversified away by investing in both Xiamen Goldenhome and Chengdu B 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 Goldenhome and Chengdu B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiamen Goldenhome Co and Chengdu B ray Media, you can compare the effects of market volatilities on Xiamen Goldenhome and Chengdu B 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 Goldenhome with a short position of Chengdu B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiamen Goldenhome and Chengdu B.

Diversification Opportunities for Xiamen Goldenhome and Chengdu B

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Xiamen and Chengdu is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen Goldenhome Co and Chengdu B ray Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu B ray and Xiamen Goldenhome 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 Goldenhome Co are associated (or correlated) with Chengdu B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu B ray has no effect on the direction of Xiamen Goldenhome i.e., Xiamen Goldenhome and Chengdu B go up and down completely randomly.

Pair Corralation between Xiamen Goldenhome and Chengdu B

Assuming the 90 days trading horizon Xiamen Goldenhome is expected to generate 1.2 times less return on investment than Chengdu B. But when comparing it to its historical volatility, Xiamen Goldenhome Co is 1.15 times less risky than Chengdu B. It trades about 0.18 of its potential returns per unit of risk. Chengdu B ray Media is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Chengdu B ray Media on September 5, 2024 and sell it today you would earn a total of  139.00  from holding Chengdu B ray Media or generate 38.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Xiamen Goldenhome Co  vs.  Chengdu B ray Media

 Performance 
       Timeline  
Xiamen Goldenhome 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Goldenhome Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Goldenhome sustained solid returns over the last few months and may actually be approaching a breakup point.
Chengdu B ray 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Chengdu B ray Media are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengdu B sustained solid returns over the last few months and may actually be approaching a breakup point.

Xiamen Goldenhome and Chengdu B Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xiamen Goldenhome and Chengdu B

The main advantage of trading using opposite Xiamen Goldenhome and Chengdu B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiamen Goldenhome position performs unexpectedly, Chengdu B 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 Chengdu B will offset losses from the drop in Chengdu B's long position.
The idea behind Xiamen Goldenhome Co and Chengdu B ray Media 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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