Correlation Between Xinjiang Goldwind and Ebara Corp

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

By analyzing existing cross correlation between Xinjiang Goldwind Science and Ebara Corp ADR, you can compare the effects of market volatilities on Xinjiang Goldwind and Ebara Corp 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 Xinjiang Goldwind with a short position of Ebara Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Goldwind and Ebara Corp.

Diversification Opportunities for Xinjiang Goldwind and Ebara Corp

0.06

Correlation Coefficient

Xinjiang Goldwind  Ebara Corp

Significant diversification

The 3 months correlation between Xinjiang and Ebara is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Goldwind Science and Ebara Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebara Corp ADR and Xinjiang Goldwind 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 Xinjiang Goldwind Science are associated (or correlated) with Ebara Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebara Corp ADR has no effect on the direction of Xinjiang Goldwind i.e., Xinjiang Goldwind and Ebara Corp go up and down completely randomly.

Pair Corralation between Xinjiang Goldwind and Ebara Corp

Assuming the 90 days horizon Xinjiang Goldwind Science is expected to under-perform the Ebara Corp. In addition to that, Xinjiang Goldwind is 1.76 times more volatile than Ebara Corp ADR. It trades about -0.05 of its total potential returns per unit of risk. Ebara Corp ADR is currently generating about -0.03 per unit of volatility. If you would invest  830.00  in Ebara Corp ADR on December 30, 2024 and sell it today you would lose (56.00) from holding Ebara Corp ADR or give up 6.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.55%
Values	Daily Returns

Xinjiang Goldwind Science  vs.  Ebara Corp ADR

Xinjiang Goldwind Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinjiang Goldwind Science has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Ebara Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ebara Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ebara Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Xinjiang Goldwind and Ebara Corp

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

The idea behind Xinjiang Goldwind Science and Ebara Corp ADR 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.