Correlation Between PACCAR and XIAOMI

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

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

Diversification Opportunities for PACCAR and XIAOMI

0.88

Correlation Coefficient

PACCAR  XIAOMI

Very poor diversification

The 3 months correlation between PACCAR and XIAOMI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc 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 PACCAR 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 PACCAR Inc 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 PACCAR i.e., PACCAR and XIAOMI go up and down completely randomly.

Pair Corralation between PACCAR and XIAOMI

Given the investment horizon of 90 days PACCAR Inc is expected to under-perform the XIAOMI. In addition to that, PACCAR is 4.59 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 20, 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	Strong
Accuracy	22.73%
Values	Daily Returns

PACCAR Inc  vs.  XIAOMI 3375 29 APR 30

PACCAR Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PACCAR Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, PACCAR 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 unsteady 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 PACCAR and XIAOMI

The main advantage of trading using opposite PACCAR and XIAOMI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR 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 PACCAR Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.