Correlation Between Mobileye Global and Xingyuan Environment

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

By analyzing existing cross correlation between Mobileye Global Class and Xingyuan Environment Technology, you can compare the effects of market volatilities on Mobileye Global and Xingyuan Environment 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 Mobileye Global with a short position of Xingyuan Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobileye Global and Xingyuan Environment.

Diversification Opportunities for Mobileye Global and Xingyuan Environment

0.2

Correlation Coefficient

Mobileye Global  Xingyuan Environment

Modest diversification

The 3 months correlation between Mobileye and Xingyuan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mobileye Global Class and Xingyuan Environment Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingyuan Environment and Mobileye Global 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 Mobileye Global Class are associated (or correlated) with Xingyuan Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingyuan Environment has no effect on the direction of Mobileye Global i.e., Mobileye Global and Xingyuan Environment go up and down completely randomly.

Pair Corralation between Mobileye Global and Xingyuan Environment

Given the investment horizon of 90 days Mobileye Global Class is expected to generate 0.86 times more return on investment than Xingyuan Environment. However, Mobileye Global Class is 1.16 times less risky than Xingyuan Environment. It trades about 0.1 of its potential returns per unit of risk. Xingyuan Environment Technology is currently generating about 0.07 per unit of risk. If you would invest  1,257  in Mobileye Global Class on October 23, 2024 and sell it today you would earn a total of  345.00  from holding Mobileye Global Class or generate 27.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Mobileye Global Class  vs.  Xingyuan Environment Technolog

Mobileye Global Class

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobileye Global Class are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Mobileye Global showed solid returns over the last few months and may actually be approaching a breakup point.

Xingyuan Environment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xingyuan Environment Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xingyuan Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobileye Global and Xingyuan Environment

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

The idea behind Mobileye Global Class and Xingyuan Environment Technology 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.