Correlation Between GoPro and Xiaomi Corp

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

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

Diversification Opportunities for GoPro and Xiaomi Corp

-0.93

Correlation Coefficient

GoPro  Xiaomi Corp

Pay attention - limited upside

The 3 months correlation between GoPro and Xiaomi is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding GoPro Inc and Xiaomi Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp ADR and GoPro 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 GoPro Inc are associated (or correlated) with Xiaomi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi Corp ADR has no effect on the direction of GoPro i.e., GoPro and Xiaomi Corp go up and down completely randomly.

Pair Corralation between GoPro and Xiaomi Corp

Given the investment horizon of 90 days GoPro Inc is expected to under-perform the Xiaomi Corp. In addition to that, GoPro is 1.21 times more volatile than Xiaomi Corp ADR. It trades about -0.12 of its total potential returns per unit of risk. Xiaomi Corp ADR is currently generating about 0.18 per unit of volatility. If you would invest  2,206  in Xiaomi Corp ADR on December 29, 2024 and sell it today you would earn a total of  1,016  from holding Xiaomi Corp ADR or generate 46.06% return on investment over 90 days.

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

GoPro Inc  vs.  Xiaomi Corp ADR

GoPro Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days GoPro Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Xiaomi Corp ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xiaomi Corp ADR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Xiaomi Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoPro and Xiaomi Corp

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

The idea behind GoPro Inc and Xiaomi Corp ADR 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.

Check out your portfolio center.

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.