Correlation Between Xiamen Goldenhome and Threes Company

Can any of the company-specific risk be diversified away by investing in both Xiamen Goldenhome and Threes Company 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 Threes Company 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 Threes Company Media, you can compare the effects of market volatilities on Xiamen Goldenhome and Threes Company 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 Threes Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiamen Goldenhome and Threes Company.

Diversification Opportunities for Xiamen Goldenhome and Threes Company

0.84

Correlation Coefficient

Xiamen Goldenhome  Threes Company

Very poor diversification

The 3 months correlation between Xiamen and Threes is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen Goldenhome Co and Threes Company Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Threes Company 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 Threes Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Threes Company has no effect on the direction of Xiamen Goldenhome i.e., Xiamen Goldenhome and Threes Company go up and down completely randomly.

Pair Corralation between Xiamen Goldenhome and Threes Company

Assuming the 90 days trading horizon Xiamen Goldenhome is expected to generate 5.14 times less return on investment than Threes Company. But when comparing it to its historical volatility, Xiamen Goldenhome Co is 1.56 times less risky than Threes Company. It trades about 0.01 of its potential returns per unit of risk. Threes Company Media is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,428  in Threes Company Media on October 4, 2024 and sell it today you would earn a total of  12.00  from holding Threes Company Media or generate 0.35% return on investment over 90 days.

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

Xiamen Goldenhome Co  vs.  Threes Company Media

Xiamen Goldenhome

Risk-Adjusted Performance

0 of 100

Very Weak

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

Threes Company

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Threes Company Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Threes Company is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xiamen Goldenhome and Threes Company

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

The idea behind Xiamen Goldenhome Co and Threes Company 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.