Correlation Between X Financial and Scibase AB

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

Diversification Opportunities for X Financial and Scibase AB

-0.15

Correlation Coefficient

X Financial  Scibase AB

Good diversification

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

Pair Corralation between X Financial and Scibase AB

Considering the 90-day investment horizon X Financial Class is expected to generate 0.94 times more return on investment than Scibase AB. However, X Financial Class is 1.07 times less risky than Scibase AB. It trades about 0.22 of its potential returns per unit of risk. Scibase AB is currently generating about 0.02 per unit of risk. If you would invest  813.00  in X Financial Class on December 22, 2024 and sell it today you would earn a total of  547.00  from holding X Financial Class or generate 67.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

X Financial Class  vs.  Scibase AB

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.

Scibase AB

Risk-Adjusted Performance

Weak

Over the last 90 days Scibase AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Scibase AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with X Financial and Scibase AB

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

The idea behind X Financial Class and Scibase AB 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.