Correlation Between Vohringer Home and XiAn Dagang

Can any of the company-specific risk be diversified away by investing in both Vohringer Home and XiAn Dagang 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 Vohringer Home and XiAn Dagang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vohringer Home Technology and XiAn Dagang Road, you can compare the effects of market volatilities on Vohringer Home and XiAn Dagang 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 Vohringer Home with a short position of XiAn Dagang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vohringer Home and XiAn Dagang.

Diversification Opportunities for Vohringer Home and XiAn Dagang

0.57

Correlation Coefficient

Vohringer Home  XiAn Dagang

Very weak diversification

The 3 months correlation between Vohringer and XiAn is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vohringer Home Technology and XiAn Dagang Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XiAn Dagang Road and Vohringer Home 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 Vohringer Home Technology are associated (or correlated) with XiAn Dagang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XiAn Dagang Road has no effect on the direction of Vohringer Home i.e., Vohringer Home and XiAn Dagang go up and down completely randomly.

Pair Corralation between Vohringer Home and XiAn Dagang

Assuming the 90 days trading horizon Vohringer Home Technology is expected to generate 0.94 times more return on investment than XiAn Dagang. However, Vohringer Home Technology is 1.07 times less risky than XiAn Dagang. It trades about 0.18 of its potential returns per unit of risk. XiAn Dagang Road is currently generating about 0.01 per unit of risk. If you would invest  461.00  in Vohringer Home Technology on December 25, 2024 and sell it today you would earn a total of  183.00  from holding Vohringer Home Technology or generate 39.7% return on investment over 90 days.

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

Vohringer Home Technology  vs.  XiAn Dagang Road

Vohringer Home Technology

Risk-Adjusted Performance

Good

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

XiAn Dagang Road

Risk-Adjusted Performance

Weak

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

Pair Trading with Vohringer Home and XiAn Dagang

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

The idea behind Vohringer Home Technology and XiAn Dagang Road 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.