Correlation Between XIAOMI and 00108WAF7

Can any of the company-specific risk be diversified away by investing in both XIAOMI and 00108WAF7 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 00108WAF7 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 AEP TEX INC, you can compare the effects of market volatilities on XIAOMI and 00108WAF7 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 00108WAF7. Check out your portfolio center. Please also check ongoing floating volatility patterns of XIAOMI and 00108WAF7.

Diversification Opportunities for XIAOMI and 00108WAF7

-0.08

Correlation Coefficient

XIAOMI  00108WAF7

Good diversification

The 3 months correlation between XIAOMI and 00108WAF7 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding XIAOMI 3375 29 APR 30 and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAF7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of XIAOMI i.e., XIAOMI and 00108WAF7 go up and down completely randomly.

Pair Corralation between XIAOMI and 00108WAF7

Assuming the 90 days trading horizon XIAOMI is expected to generate 41.24 times less return on investment than 00108WAF7. But when comparing it to its historical volatility, XIAOMI 3375 29 APR 30 is 11.68 times less risky than 00108WAF7. It trades about 0.03 of its potential returns per unit of risk. AEP TEX INC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,359  in AEP TEX INC on September 19, 2024 and sell it today you would earn a total of  309.00  from holding AEP TEX INC or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.46%
Values	Daily Returns

XIAOMI 3375 29 APR 30  vs.  AEP TEX INC

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 weak 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.

AEP TEX INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAF7 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XIAOMI and 00108WAF7

The main advantage of trading using opposite XIAOMI and 00108WAF7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XIAOMI position performs unexpectedly, 00108WAF7 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 00108WAF7 will offset losses from the drop in 00108WAF7's long position.

The idea behind XIAOMI 3375 29 APR 30 and AEP TEX INC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.