Correlation Between X Financial and Victory Integrity

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

Diversification Opportunities for X Financial and Victory Integrity

-0.73

Correlation Coefficient

X Financial  Victory Integrity

Pay attention - limited upside

The 3 months correlation between XYF and Victory is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Victory Integrity Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity 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 Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity has no effect on the direction of X Financial i.e., X Financial and Victory Integrity go up and down completely randomly.

Pair Corralation between X Financial and Victory Integrity

Considering the 90-day investment horizon X Financial Class is expected to generate 4.46 times more return on investment than Victory Integrity. However, X Financial is 4.46 times more volatile than Victory Integrity Smallmid Cap. It trades about 0.23 of its potential returns per unit of risk. Victory Integrity Smallmid Cap is currently generating about -0.07 per unit of risk. If you would invest  842.00  in X Financial Class on December 27, 2024 and sell it today you would earn a total of  689.00  from holding X Financial Class or generate 81.83% return on investment over 90 days.

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

X Financial Class  vs.  Victory Integrity Smallmid Cap

X Financial Class

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 17 (%) 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.

Victory Integrity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Integrity Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Victory Integrity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with X Financial and Victory Integrity

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

The idea behind X Financial Class and Victory Integrity Smallmid Cap 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.