Correlation Between XIAOMI and China Aircraft

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

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

Diversification Opportunities for XIAOMI and China Aircraft

-0.84

Correlation Coefficient

XIAOMI  China Aircraft

Pay attention - limited upside

The 3 months correlation between XIAOMI and China is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding XIAOMI 3375 29 APR 30 and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing and XIAOMI 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 XIAOMI 3375 29 APR 30 are associated (or correlated) with China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of XIAOMI i.e., XIAOMI and China Aircraft go up and down completely randomly.

Pair Corralation between XIAOMI and China Aircraft

Assuming the 90 days trading horizon XIAOMI is expected to generate 30.08 times less return on investment than China Aircraft. But when comparing it to its historical volatility, XIAOMI 3375 29 APR 30 is 2.69 times less risky than China Aircraft. It trades about 0.01 of its potential returns per unit of risk. China Aircraft Leasing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  14.00  in China Aircraft Leasing on October 3, 2024 and sell it today you would earn a total of  26.00  from holding China Aircraft Leasing or generate 185.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	17.09%
Values	Daily Returns

XIAOMI 3375 29 APR 30  vs.  China Aircraft Leasing

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 unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for XIAOMI 3375 29 APR 30 investors.

China Aircraft Leasing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Aircraft Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with XIAOMI and China Aircraft

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

The idea behind XIAOMI 3375 29 APR 30 and China Aircraft Leasing 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.