Correlation Between Xiangtan Electrochemical and Vontron Technology

Can any of the company-specific risk be diversified away by investing in both Xiangtan Electrochemical and Vontron Technology 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 Xiangtan Electrochemical and Vontron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xiangtan Electrochemical Scientific and Vontron Technology Co, you can compare the effects of market volatilities on Xiangtan Electrochemical and Vontron Technology 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 Xiangtan Electrochemical with a short position of Vontron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangtan Electrochemical and Vontron Technology.

Diversification Opportunities for Xiangtan Electrochemical and Vontron Technology

0.93

Correlation Coefficient

Xiangtan Electrochemical  Vontron Technology

Almost no diversification

The 3 months correlation between Xiangtan and Vontron is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Xiangtan Electrochemical Scien and Vontron Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vontron Technology and Xiangtan Electrochemical 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 Xiangtan Electrochemical Scientific are associated (or correlated) with Vontron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vontron Technology has no effect on the direction of Xiangtan Electrochemical i.e., Xiangtan Electrochemical and Vontron Technology go up and down completely randomly.

Pair Corralation between Xiangtan Electrochemical and Vontron Technology

Assuming the 90 days trading horizon Xiangtan Electrochemical Scientific is expected to generate 1.25 times more return on investment than Vontron Technology. However, Xiangtan Electrochemical is 1.25 times more volatile than Vontron Technology Co. It trades about 0.15 of its potential returns per unit of risk. Vontron Technology Co is currently generating about 0.13 per unit of risk. If you would invest  882.00  in Xiangtan Electrochemical Scientific on September 3, 2024 and sell it today you would earn a total of  277.00  from holding Xiangtan Electrochemical Scientific or generate 31.41% return on investment over 90 days.

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

Xiangtan Electrochemical Scien  vs.  Vontron Technology Co

Xiangtan Electrochemical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangtan Electrochemical Scientific are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangtan Electrochemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Vontron Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vontron Technology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vontron Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xiangtan Electrochemical and Vontron Technology

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

The idea behind Xiangtan Electrochemical Scientific and Vontron Technology Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.