Correlation Between Xiangyu Medical and Guangdong Cellwise

Can any of the company-specific risk be diversified away by investing in both Xiangyu Medical and Guangdong Cellwise 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 Guangdong Cellwise 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 Guangdong Cellwise Microelectronics, you can compare the effects of market volatilities on Xiangyu Medical and Guangdong Cellwise 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 Guangdong Cellwise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyu Medical and Guangdong Cellwise.

Diversification Opportunities for Xiangyu Medical and Guangdong Cellwise

0.74

Correlation Coefficient

Xiangyu Medical  Guangdong Cellwise

Poor diversification

The 3 months correlation between Xiangyu and Guangdong is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyu Medical Co and Guangdong Cellwise Microelectr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Cellwise 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 Guangdong Cellwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Cellwise has no effect on the direction of Xiangyu Medical i.e., Xiangyu Medical and Guangdong Cellwise go up and down completely randomly.

Pair Corralation between Xiangyu Medical and Guangdong Cellwise

Assuming the 90 days trading horizon Xiangyu Medical is expected to generate 3.11 times less return on investment than Guangdong Cellwise. But when comparing it to its historical volatility, Xiangyu Medical Co is 1.1 times less risky than Guangdong Cellwise. It trades about 0.02 of its potential returns per unit of risk. Guangdong Cellwise Microelectronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,705  in Guangdong Cellwise Microelectronics on October 24, 2024 and sell it today you would earn a total of  405.00  from holding Guangdong Cellwise Microelectronics or generate 8.61% return on investment over 90 days.

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

Xiangyu Medical Co  vs.  Guangdong Cellwise Microelectr

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.

Guangdong Cellwise

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Cellwise Microelectronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Cellwise sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xiangyu Medical and Guangdong Cellwise

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

The idea behind Xiangyu Medical Co and Guangdong Cellwise Microelectronics 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.