Correlation Between Springsnow Food and Xiangpiaopiao Food

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

By analyzing existing cross correlation between Springsnow Food Group and Xiangpiaopiao Food Co, you can compare the effects of market volatilities on Springsnow Food and Xiangpiaopiao Food 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 Springsnow Food with a short position of Xiangpiaopiao Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Springsnow Food and Xiangpiaopiao Food.

Diversification Opportunities for Springsnow Food and Xiangpiaopiao Food

0.68

Correlation Coefficient

Springsnow Food  Xiangpiaopiao Food

Poor diversification

The 3 months correlation between Springsnow and Xiangpiaopiao is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Springsnow Food Group and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food and Springsnow Food 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 Springsnow Food Group are associated (or correlated) with Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Springsnow Food i.e., Springsnow Food and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Springsnow Food and Xiangpiaopiao Food

Assuming the 90 days trading horizon Springsnow Food Group is expected to under-perform the Xiangpiaopiao Food. But the stock apears to be less risky and, when comparing its historical volatility, Springsnow Food Group is 1.52 times less risky than Xiangpiaopiao Food. The stock trades about -0.19 of its potential returns per unit of risk. The Xiangpiaopiao Food Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,607  in Xiangpiaopiao Food Co on October 9, 2024 and sell it today you would lose (171.00) from holding Xiangpiaopiao Food Co or give up 10.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Springsnow Food Group  vs.  Xiangpiaopiao Food Co

Springsnow Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Xiangpiaopiao Food

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangpiaopiao Food Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangpiaopiao Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Springsnow Food and Xiangpiaopiao Food

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

The idea behind Springsnow Food Group and Xiangpiaopiao Food 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.