Correlation Between Xinya Electronic and Shengtak New

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

Diversification Opportunities for Xinya Electronic and Shengtak New

-0.27

Correlation Coefficient

Xinya Electronic  Shengtak New

Very good diversification

The 3 months correlation between Xinya and Shengtak is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Xinya Electronic Co and Shengtak New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengtak New Material 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 Shengtak New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengtak New Material has no effect on the direction of Xinya Electronic i.e., Xinya Electronic and Shengtak New go up and down completely randomly.

Pair Corralation between Xinya Electronic and Shengtak New

Assuming the 90 days trading horizon Xinya Electronic Co is expected to generate 2.78 times more return on investment than Shengtak New. However, Xinya Electronic is 2.78 times more volatile than Shengtak New Material. It trades about -0.01 of its potential returns per unit of risk. Shengtak New Material is currently generating about -0.25 per unit of risk. If you would invest  1,472  in Xinya Electronic Co on October 15, 2024 and sell it today you would lose (37.00) from holding Xinya Electronic Co or give up 2.51% of portfolio value over 90 days.

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

Xinya Electronic Co  vs.  Shengtak New Material

Xinya Electronic

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinya Electronic Co are ranked lower than 6 (%) 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.

Shengtak New Material

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Xinya Electronic and Shengtak New

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

The idea behind Xinya Electronic Co and Shengtak New Material 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .