Correlation Between Shenzhen Kexin and Xiangpiaopiao Food

Can any of the company-specific risk be diversified away by investing in both Shenzhen Kexin and Xiangpiaopiao Food 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 Shenzhen Kexin and Xiangpiaopiao Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Kexin Communication and Xiangpiaopiao Food Co, you can compare the effects of market volatilities on Shenzhen Kexin and Xiangpiaopiao Food 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 Shenzhen Kexin with a short position of Xiangpiaopiao Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Kexin and Xiangpiaopiao Food.

Diversification Opportunities for Shenzhen Kexin and Xiangpiaopiao Food

0.23

Correlation Coefficient

Shenzhen Kexin  Xiangpiaopiao Food

Modest diversification

The 3 months correlation between Shenzhen and Xiangpiaopiao is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Kexin Communication and Xiangpiaopiao Food Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiangpiaopiao Food and Shenzhen Kexin 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 Shenzhen Kexin Communication are associated (or correlated) with Xiangpiaopiao Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiangpiaopiao Food has no effect on the direction of Shenzhen Kexin i.e., Shenzhen Kexin and Xiangpiaopiao Food go up and down completely randomly.

Pair Corralation between Shenzhen Kexin and Xiangpiaopiao Food

Assuming the 90 days trading horizon Shenzhen Kexin Communication is expected to under-perform the Xiangpiaopiao Food. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Kexin Communication is 1.54 times less risky than Xiangpiaopiao Food. The stock trades about -0.08 of its potential returns per unit of risk. The Xiangpiaopiao Food Co is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  1,416  in Xiangpiaopiao Food Co on September 29, 2024 and sell it today you would earn a total of  439.00  from holding Xiangpiaopiao Food Co or generate 31.0% return on investment over 90 days.

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

Shenzhen Kexin Communication  vs.  Xiangpiaopiao Food Co

Shenzhen Kexin Commu

Risk-Adjusted Performance

0 of 100

Very Weak

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

Xiangpiaopiao Food

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Shenzhen Kexin and Xiangpiaopiao Food

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

The idea behind Shenzhen Kexin Communication and Xiangpiaopiao Food 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.