Correlation Between Trina Solar and Xinya Electronic

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

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

Diversification Opportunities for Trina Solar and Xinya Electronic

0.11

Correlation Coefficient

Trina Solar  Xinya Electronic

Average diversification

The 3 months correlation between Trina and Xinya is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Trina Solar Co and Xinya Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinya Electronic and Trina Solar 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 Trina Solar Co are associated (or correlated) with Xinya Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinya Electronic has no effect on the direction of Trina Solar i.e., Trina Solar and Xinya Electronic go up and down completely randomly.

Pair Corralation between Trina Solar and Xinya Electronic

Assuming the 90 days trading horizon Trina Solar Co is expected to under-perform the Xinya Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Trina Solar Co is 2.46 times less risky than Xinya Electronic. The stock trades about -0.73 of its potential returns per unit of risk. The Xinya Electronic Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,385  in Xinya Electronic Co on October 3, 2024 and sell it today you would earn a total of  26.00  from holding Xinya Electronic Co or generate 1.88% return on investment over 90 days.

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

Trina Solar Co  vs.  Xinya Electronic Co

Trina Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trina Solar Co 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xinya Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Trina Solar and Xinya Electronic

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

The idea behind Trina Solar Co and Xinya Electronic 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.