Correlation Between X Financial and Columbia Global

Can any of the company-specific risk be diversified away by investing in both X Financial and Columbia Global 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 Columbia Global 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 Columbia Global Technology, you can compare the effects of market volatilities on X Financial and Columbia Global 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 Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Financial and Columbia Global.

Diversification Opportunities for X Financial and Columbia Global

0.52

Correlation Coefficient

X Financial  Columbia Global

Very weak diversification

The 3 months correlation between XYF and Columbia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech 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 Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of X Financial i.e., X Financial and Columbia Global go up and down completely randomly.

Pair Corralation between X Financial and Columbia Global

Considering the 90-day investment horizon X Financial Class is expected to generate 2.91 times more return on investment than Columbia Global. However, X Financial is 2.91 times more volatile than Columbia Global Technology. It trades about 0.07 of its potential returns per unit of risk. Columbia Global Technology is currently generating about 0.11 per unit of risk. If you would invest  326.00  in X Financial Class on October 7, 2024 and sell it today you would earn a total of  522.00  from holding X Financial Class or generate 160.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

X Financial Class  vs.  Columbia Global Technology

X Financial Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Columbia Global Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with X Financial and Columbia Global

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

The idea behind X Financial Class and Columbia Global 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.