Correlation Between Xingguang Agricultural and Iat Automobile

Can any of the company-specific risk be diversified away by investing in both Xingguang Agricultural and Iat Automobile 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 Xingguang Agricultural and Iat Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xingguang Agricultural Mach and Iat Automobile Technology, you can compare the effects of market volatilities on Xingguang Agricultural and Iat Automobile 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 Xingguang Agricultural with a short position of Iat Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xingguang Agricultural and Iat Automobile.

Diversification Opportunities for Xingguang Agricultural and Iat Automobile

0.66

Correlation Coefficient

Xingguang Agricultural  Iat Automobile

Poor diversification

The 3 months correlation between Xingguang and Iat is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Xingguang Agricultural Mach and Iat Automobile Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iat Automobile Technology and Xingguang Agricultural 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 Xingguang Agricultural Mach are associated (or correlated) with Iat Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iat Automobile Technology has no effect on the direction of Xingguang Agricultural i.e., Xingguang Agricultural and Iat Automobile go up and down completely randomly.

Pair Corralation between Xingguang Agricultural and Iat Automobile

Assuming the 90 days trading horizon Xingguang Agricultural Mach is expected to under-perform the Iat Automobile. In addition to that, Xingguang Agricultural is 1.08 times more volatile than Iat Automobile Technology. It trades about -0.05 of its total potential returns per unit of risk. Iat Automobile Technology is currently generating about 0.0 per unit of volatility. If you would invest  1,146  in Iat Automobile Technology on October 26, 2024 and sell it today you would lose (44.00) from holding Iat Automobile Technology or give up 3.84% of portfolio value over 90 days.

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

Xingguang Agricultural Mach  vs.  Iat Automobile Technology

Xingguang Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xingguang Agricultural Mach has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Iat Automobile Technology

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Xingguang Agricultural and Iat Automobile

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

The idea behind Xingguang Agricultural Mach and Iat Automobile Technology 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.