Correlation Between Global Ship and Xinyi Solar

Can any of the company-specific risk be diversified away by investing in both Global Ship and Xinyi Solar 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 Global Ship and Xinyi Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Ship Lease and Xinyi Solar Holdings, you can compare the effects of market volatilities on Global Ship and Xinyi Solar 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 Global Ship with a short position of Xinyi Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Xinyi Solar.

Diversification Opportunities for Global Ship and Xinyi Solar

0.5

Correlation Coefficient

Global Ship  Xinyi Solar

Very weak diversification

The 3 months correlation between Global and Xinyi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Xinyi Solar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Solar Holdings and Global Ship 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 Global Ship Lease are associated (or correlated) with Xinyi Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Solar Holdings has no effect on the direction of Global Ship i.e., Global Ship and Xinyi Solar go up and down completely randomly.

Pair Corralation between Global Ship and Xinyi Solar

Assuming the 90 days horizon Global Ship Lease is expected to under-perform the Xinyi Solar. But the stock apears to be less risky and, when comparing its historical volatility, Global Ship Lease is 3.55 times less risky than Xinyi Solar. The stock trades about -0.07 of its potential returns per unit of risk. The Xinyi Solar Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  39.00  in Xinyi Solar Holdings on September 3, 2024 and sell it today you would earn a total of  3.00  from holding Xinyi Solar Holdings or generate 7.69% return on investment over 90 days.

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

Global Ship Lease  vs.  Xinyi Solar Holdings

Global Ship Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Ship Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Xinyi Solar Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinyi Solar Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xinyi Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Ship and Xinyi Solar

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

The idea behind Global Ship Lease and Xinyi Solar Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.