Correlation Between Xiangpiaopiao Food and CIMC Vehicles

Can any of the company-specific risk be diversified away by investing in both Xiangpiaopiao Food and CIMC Vehicles 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 Xiangpiaopiao Food and CIMC Vehicles into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xiangpiaopiao Food Co and CIMC Vehicles Co, you can compare the effects of market volatilities on Xiangpiaopiao Food and CIMC Vehicles 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 Xiangpiaopiao Food with a short position of CIMC Vehicles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangpiaopiao Food and CIMC Vehicles.

Diversification Opportunities for Xiangpiaopiao Food and CIMC Vehicles

0.5

Correlation Coefficient

Xiangpiaopiao Food  CIMC Vehicles

Very weak diversification

The 3 months correlation between Xiangpiaopiao and CIMC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Xiangpiaopiao Food Co and CIMC Vehicles Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMC Vehicles and Xiangpiaopiao Food 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 Xiangpiaopiao Food Co are associated (or correlated) with CIMC Vehicles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMC Vehicles has no effect on the direction of Xiangpiaopiao Food i.e., Xiangpiaopiao Food and CIMC Vehicles go up and down completely randomly.

Pair Corralation between Xiangpiaopiao Food and CIMC Vehicles

Assuming the 90 days trading horizon Xiangpiaopiao Food is expected to generate 1.13 times less return on investment than CIMC Vehicles. In addition to that, Xiangpiaopiao Food is 1.13 times more volatile than CIMC Vehicles Co. It trades about 0.02 of its total potential returns per unit of risk. CIMC Vehicles Co is currently generating about 0.03 per unit of volatility. If you would invest  768.00  in CIMC Vehicles Co on September 22, 2024 and sell it today you would earn a total of  172.00  from holding CIMC Vehicles Co or generate 22.4% return on investment over 90 days.

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

Xiangpiaopiao Food Co  vs.  CIMC Vehicles Co

Xiangpiaopiao Food

Risk-Adjusted Performance

14 of 100

Good

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

CIMC Vehicles

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CIMC Vehicles Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CIMC Vehicles may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xiangpiaopiao Food and CIMC Vehicles

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

The idea behind Xiangpiaopiao Food Co and CIMC Vehicles Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.