Correlation Between Xiangyu Medical and Rising Nonferrous

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

By analyzing existing cross correlation between Xiangyu Medical Co and Rising Nonferrous Metals, you can compare the effects of market volatilities on Xiangyu Medical and Rising Nonferrous 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 Xiangyu Medical with a short position of Rising Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyu Medical and Rising Nonferrous.

Diversification Opportunities for Xiangyu Medical and Rising Nonferrous

0.36

Correlation Coefficient

Xiangyu Medical  Rising Nonferrous

Weak diversification

The 3 months correlation between Xiangyu and Rising is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyu Medical Co and Rising Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Nonferrous Metals and Xiangyu Medical 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 Xiangyu Medical Co are associated (or correlated) with Rising Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Nonferrous Metals has no effect on the direction of Xiangyu Medical i.e., Xiangyu Medical and Rising Nonferrous go up and down completely randomly.

Pair Corralation between Xiangyu Medical and Rising Nonferrous

Assuming the 90 days trading horizon Xiangyu Medical Co is expected to under-perform the Rising Nonferrous. In addition to that, Xiangyu Medical is 1.49 times more volatile than Rising Nonferrous Metals. It trades about -0.2 of its total potential returns per unit of risk. Rising Nonferrous Metals is currently generating about 0.01 per unit of volatility. If you would invest  3,001  in Rising Nonferrous Metals on October 10, 2024 and sell it today you would lose (1.00) from holding Rising Nonferrous Metals or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Xiangyu Medical Co  vs.  Rising Nonferrous Metals

Xiangyu Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyu Medical Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xiangyu Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rising Nonferrous Metals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Nonferrous Metals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rising Nonferrous may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xiangyu Medical and Rising Nonferrous

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

The idea behind Xiangyu Medical Co and Rising Nonferrous Metals 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.