Correlation Between Linewell Software and Xinjiang Baodi

Can any of the company-specific risk be diversified away by investing in both Linewell Software and Xinjiang Baodi 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 Linewell Software and Xinjiang Baodi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Linewell Software Co and Xinjiang Baodi Mining, you can compare the effects of market volatilities on Linewell Software and Xinjiang Baodi 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 Linewell Software with a short position of Xinjiang Baodi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linewell Software and Xinjiang Baodi.

Diversification Opportunities for Linewell Software and Xinjiang Baodi

0.31

Correlation Coefficient

Linewell Software  Xinjiang Baodi

Weak diversification

The 3 months correlation between Linewell and Xinjiang is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Linewell Software Co and Xinjiang Baodi Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Baodi Mining and Linewell Software 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 Linewell Software Co are associated (or correlated) with Xinjiang Baodi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Baodi Mining has no effect on the direction of Linewell Software i.e., Linewell Software and Xinjiang Baodi go up and down completely randomly.

Pair Corralation between Linewell Software and Xinjiang Baodi

Assuming the 90 days trading horizon Linewell Software is expected to generate 2.52 times less return on investment than Xinjiang Baodi. In addition to that, Linewell Software is 1.49 times more volatile than Xinjiang Baodi Mining. It trades about 0.02 of its total potential returns per unit of risk. Xinjiang Baodi Mining is currently generating about 0.08 per unit of volatility. If you would invest  608.00  in Xinjiang Baodi Mining on October 10, 2024 and sell it today you would earn a total of  63.00  from holding Xinjiang Baodi Mining or generate 10.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Linewell Software Co  vs.  Xinjiang Baodi Mining

Linewell Software

Risk-Adjusted Performance

1 of 100

Weak

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

Xinjiang Baodi Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Baodi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Linewell Software and Xinjiang Baodi

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

The idea behind Linewell Software Co and Xinjiang Baodi Mining 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 Transaction History module to view history of all your transactions and understand their impact on performance.