Correlation Between Laser Photonics and Xinjiang Goldwind

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

By analyzing existing cross correlation between Laser Photonics and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Laser Photonics and Xinjiang Goldwind 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 Laser Photonics with a short position of Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laser Photonics and Xinjiang Goldwind.

Diversification Opportunities for Laser Photonics and Xinjiang Goldwind

-0.7

Correlation Coefficient

Laser Photonics  Xinjiang Goldwind

Excellent diversification

The 3 months correlation between Laser and Xinjiang is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Laser Photonics and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science and Laser Photonics 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 Laser Photonics are associated (or correlated) with Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Laser Photonics i.e., Laser Photonics and Xinjiang Goldwind go up and down completely randomly.

Pair Corralation between Laser Photonics and Xinjiang Goldwind

Given the investment horizon of 90 days Laser Photonics is expected to under-perform the Xinjiang Goldwind. But the stock apears to be less risky and, when comparing its historical volatility, Laser Photonics is 1.19 times less risky than Xinjiang Goldwind. The stock trades about -0.06 of its potential returns per unit of risk. The Xinjiang Goldwind Science is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Xinjiang Goldwind Science on September 26, 2024 and sell it today you would earn a total of  8.00  from holding Xinjiang Goldwind Science or generate 10.0% return on investment over 90 days.

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

Laser Photonics  vs.  Xinjiang Goldwind Science

Laser Photonics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laser Photonics 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Xinjiang Goldwind Science

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Goldwind Science are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Xinjiang Goldwind reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laser Photonics and Xinjiang Goldwind

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

The idea behind Laser Photonics and Xinjiang Goldwind Science 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.