Correlation Between Biwin Storage and Xingyuan Environment

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

By analyzing existing cross correlation between Biwin Storage Technology and Xingyuan Environment Technology, you can compare the effects of market volatilities on Biwin Storage and Xingyuan Environment 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 Biwin Storage with a short position of Xingyuan Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biwin Storage and Xingyuan Environment.

Diversification Opportunities for Biwin Storage and Xingyuan Environment

0.18

Correlation Coefficient

Biwin Storage  Xingyuan Environment

Average diversification

The 3 months correlation between Biwin and Xingyuan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Biwin Storage Technology and Xingyuan Environment Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingyuan Environment and Biwin Storage 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 Biwin Storage Technology are associated (or correlated) with Xingyuan Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingyuan Environment has no effect on the direction of Biwin Storage i.e., Biwin Storage and Xingyuan Environment go up and down completely randomly.

Pair Corralation between Biwin Storage and Xingyuan Environment

Assuming the 90 days trading horizon Biwin Storage Technology is expected to generate 1.14 times more return on investment than Xingyuan Environment. However, Biwin Storage is 1.14 times more volatile than Xingyuan Environment Technology. It trades about 0.01 of its potential returns per unit of risk. Xingyuan Environment Technology is currently generating about -0.07 per unit of risk. If you would invest  7,028  in Biwin Storage Technology on December 26, 2024 and sell it today you would lose (78.00) from holding Biwin Storage Technology or give up 1.11% of portfolio value over 90 days.

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

Biwin Storage Technology  vs.  Xingyuan Environment Technolog

Biwin Storage Technology

Risk-Adjusted Performance

Very Weak

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

Xingyuan Environment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xingyuan Environment Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Biwin Storage and Xingyuan Environment

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

The idea behind Biwin Storage Technology and Xingyuan Environment Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.