Correlation Between I Jang and Xintec

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

By analyzing existing cross correlation between I Jang Industrial and Xintec, you can compare the effects of market volatilities on I Jang and Xintec 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 I Jang with a short position of Xintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Jang and Xintec.

Diversification Opportunities for I Jang and Xintec

0.2

Correlation Coefficient

I Jang  Xintec

Modest diversification

The 3 months correlation between 8342 and Xintec is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding I Jang Industrial and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec and I Jang 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 I Jang Industrial are associated (or correlated) with Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of I Jang i.e., I Jang and Xintec go up and down completely randomly.

Pair Corralation between I Jang and Xintec

Assuming the 90 days trading horizon I Jang Industrial is expected to generate 0.62 times more return on investment than Xintec. However, I Jang Industrial is 1.61 times less risky than Xintec. It trades about 0.11 of its potential returns per unit of risk. Xintec is currently generating about -0.16 per unit of risk. If you would invest  8,740  in I Jang Industrial on October 6, 2024 and sell it today you would earn a total of  190.00  from holding I Jang Industrial or generate 2.17% return on investment over 90 days.

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

I Jang Industrial  vs.  Xintec

I Jang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I Jang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, I Jang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Xintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xintec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with I Jang and Xintec

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

The idea behind I Jang Industrial and Xintec 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.