Correlation Between Pure Storage and XIAOMI

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

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

Diversification Opportunities for Pure Storage and XIAOMI

0.57

Correlation Coefficient

Pure Storage  XIAOMI

Very weak diversification

The 3 months correlation between Pure and XIAOMI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage 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 Pure Storage 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 Pure Storage 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 Pure Storage i.e., Pure Storage and XIAOMI go up and down completely randomly.

Pair Corralation between Pure Storage and XIAOMI

Given the investment horizon of 90 days Pure Storage is expected to generate 3.09 times less return on investment than XIAOMI. In addition to that, Pure Storage is 1.84 times more volatile than XIAOMI 3375 29 APR 30. It trades about 0.12 of its total potential returns per unit of risk. XIAOMI 3375 29 APR 30 is currently generating about 0.71 per unit of volatility. If you would invest  9,014  in XIAOMI 3375 29 APR 30 on October 24, 2024 and sell it today you would earn a total of  128.00  from holding XIAOMI 3375 29 APR 30 or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	11.11%
Values	Daily Returns

Pure Storage  vs.  XIAOMI 3375 29 APR 30

Pure Storage

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Storage are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pure Storage reported solid returns over the last few months and may actually be approaching a breakup point.

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 somewhat strong basic indicators, XIAOMI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pure Storage and XIAOMI

The main advantage of trading using opposite Pure Storage and XIAOMI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage 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 Pure Storage 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..