Correlation Between Xinya Electronic and ShenZhen YUTO

Can any of the company-specific risk be diversified away by investing in both Xinya Electronic and ShenZhen YUTO 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 ShenZhen YUTO 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 ShenZhen YUTO Packaging, you can compare the effects of market volatilities on Xinya Electronic and ShenZhen YUTO 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 ShenZhen YUTO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinya Electronic and ShenZhen YUTO.

Diversification Opportunities for Xinya Electronic and ShenZhen YUTO

0.52

Correlation Coefficient

Xinya Electronic  ShenZhen YUTO

Very weak diversification

The 3 months correlation between Xinya and ShenZhen is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xinya Electronic Co and ShenZhen YUTO Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShenZhen YUTO Packaging 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 ShenZhen YUTO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShenZhen YUTO Packaging has no effect on the direction of Xinya Electronic i.e., Xinya Electronic and ShenZhen YUTO go up and down completely randomly.

Pair Corralation between Xinya Electronic and ShenZhen YUTO

Assuming the 90 days trading horizon Xinya Electronic is expected to generate 33.55 times less return on investment than ShenZhen YUTO. In addition to that, Xinya Electronic is 2.27 times more volatile than ShenZhen YUTO Packaging. It trades about 0.0 of its total potential returns per unit of risk. ShenZhen YUTO Packaging is currently generating about 0.2 per unit of volatility. If you would invest  2,468  in ShenZhen YUTO Packaging on October 11, 2024 and sell it today you would earn a total of  198.00  from holding ShenZhen YUTO Packaging or generate 8.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Xinya Electronic Co  vs.  ShenZhen YUTO Packaging

Xinya Electronic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xinya Electronic Co are ranked lower than 7 (%) 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.

ShenZhen YUTO Packaging

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ShenZhen YUTO Packaging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ShenZhen YUTO may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xinya Electronic and ShenZhen YUTO

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

The idea behind Xinya Electronic Co and ShenZhen YUTO Packaging 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.