Correlation Between X Financial and Shenzhen United

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

By analyzing existing cross correlation between X Financial Class and Shenzhen United Winners, you can compare the effects of market volatilities on X Financial and Shenzhen United 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 X Financial with a short position of Shenzhen United. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Financial and Shenzhen United.

Diversification Opportunities for X Financial and Shenzhen United

-0.15

Correlation Coefficient

X Financial  Shenzhen United

Good diversification

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

Pair Corralation between X Financial and Shenzhen United

Considering the 90-day investment horizon X Financial Class is expected to generate 1.06 times more return on investment than Shenzhen United. However, X Financial is 1.06 times more volatile than Shenzhen United Winners. It trades about -0.1 of its potential returns per unit of risk. Shenzhen United Winners is currently generating about -0.19 per unit of risk. If you would invest  795.00  in X Financial Class on October 21, 2024 and sell it today you would lose (52.00) from holding X Financial Class or give up 6.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

X Financial Class  vs.  Shenzhen United Winners

X Financial Class

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen United Winners

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen United Winners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen United may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with X Financial and Shenzhen United

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

The idea behind X Financial Class and Shenzhen United Winners 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.