Correlation Between Blackline and XIAO I

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

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

Diversification Opportunities for Blackline and XIAO I

0.57

Correlation Coefficient

Blackline  XIAO I

Very weak diversification

The 3 months correlation between Blackline and XIAO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American and Blackline 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 Blackline are associated (or correlated) with XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of Blackline i.e., Blackline and XIAO I go up and down completely randomly.

Pair Corralation between Blackline and XIAO I

Allowing for the 90-day total investment horizon Blackline is expected to generate 2.18 times less return on investment than XIAO I. But when comparing it to its historical volatility, Blackline is 5.07 times less risky than XIAO I. It trades about 0.24 of its potential returns per unit of risk. XIAO I American is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  404.00  in XIAO I American on September 13, 2024 and sell it today you would earn a total of  162.00  from holding XIAO I American or generate 40.1% return on investment over 90 days.

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

Blackline  vs.  XIAO I American

Blackline

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Blackline disclosed solid returns over the last few months and may actually be approaching a breakup point.

XIAO I American

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XIAO I American are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, XIAO I demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackline and XIAO I

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

The idea behind Blackline and XIAO I American 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.