Correlation Between Everdisplay Optronics and Chengdu Xingrong

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

By analyzing existing cross correlation between Everdisplay Optronics Shanghai and Chengdu Xingrong Investment, you can compare the effects of market volatilities on Everdisplay Optronics and Chengdu Xingrong 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 Everdisplay Optronics with a short position of Chengdu Xingrong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everdisplay Optronics and Chengdu Xingrong.

Diversification Opportunities for Everdisplay Optronics and Chengdu Xingrong

0.28

Correlation Coefficient

Everdisplay Optronics  Chengdu Xingrong

Modest diversification

The 3 months correlation between Everdisplay and Chengdu is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Everdisplay Optronics Shanghai and Chengdu Xingrong Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xingrong Inv and Everdisplay Optronics 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 Everdisplay Optronics Shanghai are associated (or correlated) with Chengdu Xingrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xingrong Inv has no effect on the direction of Everdisplay Optronics i.e., Everdisplay Optronics and Chengdu Xingrong go up and down completely randomly.

Pair Corralation between Everdisplay Optronics and Chengdu Xingrong

Assuming the 90 days trading horizon Everdisplay Optronics is expected to generate 7.19 times less return on investment than Chengdu Xingrong. In addition to that, Everdisplay Optronics is 1.97 times more volatile than Chengdu Xingrong Investment. It trades about 0.01 of its total potential returns per unit of risk. Chengdu Xingrong Investment is currently generating about 0.14 per unit of volatility. If you would invest  715.00  in Chengdu Xingrong Investment on September 24, 2024 and sell it today you would earn a total of  23.00  from holding Chengdu Xingrong Investment or generate 3.22% return on investment over 90 days.

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

Everdisplay Optronics Shanghai  vs.  Chengdu Xingrong Investment

Everdisplay Optronics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Everdisplay Optronics Shanghai are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Everdisplay Optronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Chengdu Xingrong Inv

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Chengdu Xingrong Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Chengdu Xingrong sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everdisplay Optronics and Chengdu Xingrong

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

The idea behind Everdisplay Optronics Shanghai and Chengdu Xingrong Investment 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.