Correlation Between Xizi Clean and StarPower Semiconductor

Can any of the company-specific risk be diversified away by investing in both Xizi Clean and StarPower Semiconductor 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 Xizi Clean and StarPower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xizi Clean Energy and StarPower Semiconductor, you can compare the effects of market volatilities on Xizi Clean and StarPower Semiconductor 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 Xizi Clean with a short position of StarPower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xizi Clean and StarPower Semiconductor.

Diversification Opportunities for Xizi Clean and StarPower Semiconductor

0.92

Correlation Coefficient

Xizi Clean  StarPower Semiconductor

Almost no diversification

The 3 months correlation between Xizi and StarPower is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Xizi Clean Energy and StarPower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StarPower Semiconductor and Xizi Clean 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 Xizi Clean Energy are associated (or correlated) with StarPower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StarPower Semiconductor has no effect on the direction of Xizi Clean i.e., Xizi Clean and StarPower Semiconductor go up and down completely randomly.

Pair Corralation between Xizi Clean and StarPower Semiconductor

Assuming the 90 days trading horizon Xizi Clean Energy is expected to generate 0.83 times more return on investment than StarPower Semiconductor. However, Xizi Clean Energy is 1.2 times less risky than StarPower Semiconductor. It trades about 0.0 of its potential returns per unit of risk. StarPower Semiconductor is currently generating about -0.06 per unit of risk. If you would invest  1,371  in Xizi Clean Energy on September 13, 2024 and sell it today you would lose (182.00) from holding Xizi Clean Energy or give up 13.27% of portfolio value over 90 days.

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

Xizi Clean Energy  vs.  StarPower Semiconductor

Xizi Clean Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xizi Clean Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xizi Clean sustained solid returns over the last few months and may actually be approaching a breakup point.

StarPower Semiconductor

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in StarPower Semiconductor are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, StarPower Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xizi Clean and StarPower Semiconductor

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

The idea behind Xizi Clean Energy and StarPower Semiconductor 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.