Correlation Between Grocery Outlet and XIAOMI

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

By analyzing existing cross correlation between Grocery Outlet Holding and XIAOMI 3375 29 APR 30, you can compare the effects of market volatilities on Grocery Outlet and XIAOMI 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 Grocery Outlet with a short position of XIAOMI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and XIAOMI.

Diversification Opportunities for Grocery Outlet and XIAOMI

0.57

Correlation Coefficient

Grocery Outlet  XIAOMI

Very weak diversification

The 3 months correlation between Grocery and XIAOMI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and XIAOMI 3375 29 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAOMI 3375 29 and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with XIAOMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAOMI 3375 29 has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and XIAOMI go up and down completely randomly.

Pair Corralation between Grocery Outlet and XIAOMI

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the XIAOMI. In addition to that, Grocery Outlet is 10.86 times more volatile than XIAOMI 3375 29 APR 30. It trades about -0.07 of its total potential returns per unit of risk. XIAOMI 3375 29 APR 30 is currently generating about 0.03 per unit of volatility. If you would invest  9,138  in XIAOMI 3375 29 APR 30 on September 21, 2024 and sell it today you would earn a total of  4.00  from holding XIAOMI 3375 29 APR 30 or generate 0.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	22.73%
Values	Daily Returns

Grocery Outlet Holding  vs.  XIAOMI 3375 29 APR 30

Grocery Outlet Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grocery Outlet Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Grocery Outlet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

XIAOMI 3375 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XIAOMI 3375 29 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for XIAOMI 3375 29 APR 30 investors.

Pair Trading with Grocery Outlet and XIAOMI

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

The idea behind Grocery Outlet Holding and XIAOMI 3375 29 APR 30 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.