Correlation Between X Financial and 512807AN8

Can any of the company-specific risk be diversified away by investing in both X Financial and 512807AN8 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 512807AN8 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 LAM RESH P, you can compare the effects of market volatilities on X Financial and 512807AN8 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 512807AN8. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Financial and 512807AN8.

Diversification Opportunities for X Financial and 512807AN8

0.11

Correlation Coefficient

X Financial  512807AN8

Average diversification

The 3 months correlation between XYF and 512807AN8 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and LAM RESH P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAM RESH P 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 512807AN8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAM RESH P has no effect on the direction of X Financial i.e., X Financial and 512807AN8 go up and down completely randomly.

Pair Corralation between X Financial and 512807AN8

Considering the 90-day investment horizon X Financial Class is expected to generate 18.7 times more return on investment than 512807AN8. However, X Financial is 18.7 times more volatile than LAM RESH P. It trades about 0.06 of its potential returns per unit of risk. LAM RESH P is currently generating about 0.01 per unit of risk. If you would invest  339.00  in X Financial Class on October 22, 2024 and sell it today you would earn a total of  404.00  from holding X Financial Class or generate 119.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.34%
Values	Daily Returns

X Financial Class  vs.  LAM RESH P

X Financial Class

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 4 (%) 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.

LAM RESH P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LAM RESH P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 512807AN8 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with X Financial and 512807AN8

The main advantage of trading using opposite X Financial and 512807AN8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Financial position performs unexpectedly, 512807AN8 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 512807AN8 will offset losses from the drop in 512807AN8's long position.

The idea behind X Financial Class and LAM RESH P 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.