Correlation Between Xinya Electronic and GRG Banking

Can any of the company-specific risk be diversified away by investing in both Xinya Electronic and GRG Banking 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 Xinya Electronic and GRG Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xinya Electronic Co and GRG Banking Equipment, you can compare the effects of market volatilities on Xinya Electronic and GRG Banking 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 Xinya Electronic with a short position of GRG Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinya Electronic and GRG Banking.

Diversification Opportunities for Xinya Electronic and GRG Banking

0.36

Correlation Coefficient

Xinya Electronic  GRG Banking

Weak diversification

The 3 months correlation between Xinya and GRG is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Xinya Electronic Co and GRG Banking Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRG Banking Equipment and Xinya Electronic 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 Xinya Electronic Co are associated (or correlated) with GRG Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRG Banking Equipment has no effect on the direction of Xinya Electronic i.e., Xinya Electronic and GRG Banking go up and down completely randomly.

Pair Corralation between Xinya Electronic and GRG Banking

Assuming the 90 days trading horizon Xinya Electronic Co is expected to generate 1.3 times more return on investment than GRG Banking. However, Xinya Electronic is 1.3 times more volatile than GRG Banking Equipment. It trades about 0.05 of its potential returns per unit of risk. GRG Banking Equipment is currently generating about 0.0 per unit of risk. If you would invest  1,212  in Xinya Electronic Co on October 9, 2024 and sell it today you would earn a total of  231.00  from holding Xinya Electronic Co or generate 19.06% return on investment over 90 days.

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

Xinya Electronic Co  vs.  GRG Banking Equipment

Xinya Electronic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinya Electronic Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinya Electronic sustained solid returns over the last few months and may actually be approaching a breakup point.

GRG Banking Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRG Banking Equipment 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 Xinya Electronic and GRG Banking

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

The idea behind Xinya Electronic Co and GRG Banking Equipment 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.