Correlation Between MicroCloud Hologram and Xiaomi Corp

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

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

Diversification Opportunities for MicroCloud Hologram and Xiaomi Corp

-0.46

Correlation Coefficient

MicroCloud Hologram  Xiaomi Corp

Very good diversification

The 3 months correlation between MicroCloud and Xiaomi is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MicroCloud Hologram and Xiaomi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp and MicroCloud Hologram 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 MicroCloud Hologram 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 has no effect on the direction of MicroCloud Hologram i.e., MicroCloud Hologram and Xiaomi Corp go up and down completely randomly.

Pair Corralation between MicroCloud Hologram and Xiaomi Corp

Given the investment horizon of 90 days MicroCloud Hologram is expected to generate 6.71 times more return on investment than Xiaomi Corp. However, MicroCloud Hologram is 6.71 times more volatile than Xiaomi Corp. It trades about 0.06 of its potential returns per unit of risk. Xiaomi Corp is currently generating about 0.26 per unit of risk. If you would invest  130.00  in MicroCloud Hologram on December 22, 2024 and sell it today you would lose (30.00) from holding MicroCloud Hologram or give up 23.08% of portfolio value over 90 days.

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

MicroCloud Hologram  vs.  Xiaomi Corp

MicroCloud Hologram

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MicroCloud Hologram are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, MicroCloud Hologram displayed solid returns over the last few months and may actually be approaching a breakup point.

Xiaomi Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xiaomi Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Xiaomi Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MicroCloud Hologram and Xiaomi Corp

The main advantage of trading using opposite MicroCloud Hologram and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroCloud Hologram 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 MicroCloud Hologram and Xiaomi 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.