Correlation Between XIAO I and Perfect Corp

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

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

Diversification Opportunities for XIAO I and Perfect Corp

0.18

Correlation Coefficient

XIAO I  Perfect Corp

Average diversification

The 3 months correlation between XIAO and Perfect is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding XIAO I American and Perfect Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perfect Corp and XIAO I 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 XIAO I American are associated (or correlated) with Perfect Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perfect Corp has no effect on the direction of XIAO I i.e., XIAO I and Perfect Corp go up and down completely randomly.

Pair Corralation between XIAO I and Perfect Corp

Given the investment horizon of 90 days XIAO I American is expected to under-perform the Perfect Corp. In addition to that, XIAO I is 1.59 times more volatile than Perfect Corp. It trades about -0.03 of its total potential returns per unit of risk. Perfect Corp is currently generating about -0.02 per unit of volatility. If you would invest  743.00  in Perfect Corp on October 24, 2024 and sell it today you would lose (462.00) from holding Perfect Corp or give up 62.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.14%
Values	Daily Returns

XIAO I American  vs.  Perfect Corp

XIAO I American

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XIAO I American are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, XIAO I demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Perfect Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perfect Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Perfect Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XIAO I and Perfect Corp

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

The idea behind XIAO I American and Perfect Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.