Correlation Between Xingguang Agricultural and Cinda Securities

Can any of the company-specific risk be diversified away by investing in both Xingguang Agricultural and Cinda Securities 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 Cinda Securities 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 Cinda Securities Co, you can compare the effects of market volatilities on Xingguang Agricultural and Cinda Securities 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 Cinda Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xingguang Agricultural and Cinda Securities.

Diversification Opportunities for Xingguang Agricultural and Cinda Securities

0.56

Correlation Coefficient

Xingguang Agricultural  Cinda Securities

Very weak diversification

The 3 months correlation between Xingguang and Cinda is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xingguang Agricultural Mach and Cinda Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinda Securities 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 Cinda Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinda Securities has no effect on the direction of Xingguang Agricultural i.e., Xingguang Agricultural and Cinda Securities go up and down completely randomly.

Pair Corralation between Xingguang Agricultural and Cinda Securities

Assuming the 90 days trading horizon Xingguang Agricultural is expected to generate 3.59 times less return on investment than Cinda Securities. In addition to that, Xingguang Agricultural is 1.07 times more volatile than Cinda Securities Co. It trades about 0.01 of its total potential returns per unit of risk. Cinda Securities Co is currently generating about 0.03 per unit of volatility. If you would invest  1,179  in Cinda Securities Co on October 23, 2024 and sell it today you would earn a total of  188.00  from holding Cinda Securities Co or generate 15.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Xingguang Agricultural Mach  vs.  Cinda Securities Co

Xingguang Agricultural

Risk-Adjusted Performance

1 of 100

Weak

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

Cinda Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cinda Securities Co 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.

Pair Trading with Xingguang Agricultural and Cinda Securities

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

The idea behind Xingguang Agricultural Mach and Cinda Securities 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.