Correlation Between Xinyi Solar and Meyer Burger

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

By analyzing existing cross correlation between Xinyi Solar Holdings and Meyer Burger Technology, you can compare the effects of market volatilities on Xinyi Solar and Meyer Burger 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 Xinyi Solar with a short position of Meyer Burger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyi Solar and Meyer Burger.

Diversification Opportunities for Xinyi Solar and Meyer Burger

0.15

Correlation Coefficient

Xinyi Solar  Meyer Burger

Average diversification

The 3 months correlation between Xinyi and Meyer is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Xinyi Solar Holdings and Meyer Burger Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meyer Burger Technology and Xinyi Solar 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 Xinyi Solar Holdings are associated (or correlated) with Meyer Burger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meyer Burger Technology has no effect on the direction of Xinyi Solar i.e., Xinyi Solar and Meyer Burger go up and down completely randomly.

Pair Corralation between Xinyi Solar and Meyer Burger

Assuming the 90 days horizon Xinyi Solar is expected to generate 44.51 times less return on investment than Meyer Burger. But when comparing it to its historical volatility, Xinyi Solar Holdings is 7.48 times less risky than Meyer Burger. It trades about 0.02 of its potential returns per unit of risk. Meyer Burger Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Meyer Burger Technology on October 20, 2024 and sell it today you would earn a total of  115.00  from holding Meyer Burger Technology or generate 63.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Xinyi Solar Holdings  vs.  Meyer Burger Technology

Xinyi Solar Holdings

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Xinyi Solar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Xinyi Solar is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Meyer Burger Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meyer Burger Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Meyer Burger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinyi Solar and Meyer Burger

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

The idea behind Xinyi Solar Holdings and Meyer Burger Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.