Correlation Between Xinhua Winshare and Air Liquide

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

By analyzing existing cross correlation between Xinhua Winshare Publishing and Air Liquide SA, you can compare the effects of market volatilities on Xinhua Winshare and Air Liquide 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 Xinhua Winshare with a short position of Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinhua Winshare and Air Liquide.

Diversification Opportunities for Xinhua Winshare and Air Liquide

-0.33

Correlation Coefficient

Xinhua Winshare  Air Liquide

Very good diversification

The 3 months correlation between Xinhua and Air is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA and Xinhua Winshare 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 Xinhua Winshare Publishing are associated (or correlated) with Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and Air Liquide go up and down completely randomly.

Pair Corralation between Xinhua Winshare and Air Liquide

Assuming the 90 days horizon Xinhua Winshare Publishing is expected to generate 2.6 times more return on investment than Air Liquide. However, Xinhua Winshare is 2.6 times more volatile than Air Liquide SA. It trades about 0.67 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.31 per unit of risk. If you would invest  120.00  in Xinhua Winshare Publishing on October 5, 2024 and sell it today you would earn a total of  24.00  from holding Xinhua Winshare Publishing or generate 20.0% return on investment over 90 days.

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

Xinhua Winshare Publishing  vs.  Air Liquide SA

Xinhua Winshare Publ

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Xinhua Winshare Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Xinhua Winshare reported solid returns over the last few months and may actually be approaching a breakup point.

Air Liquide SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Air Liquide SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Xinhua Winshare and Air Liquide

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

The idea behind Xinhua Winshare Publishing and Air Liquide SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.