Correlation Between Poly Real and HaiXin Foods

Can any of the company-specific risk be diversified away by investing in both Poly Real and HaiXin Foods 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 Poly Real and HaiXin Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Poly Real Estate and HaiXin Foods Co, you can compare the effects of market volatilities on Poly Real and HaiXin Foods 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 Poly Real with a short position of HaiXin Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poly Real and HaiXin Foods.

Diversification Opportunities for Poly Real and HaiXin Foods

0.63

Correlation Coefficient

Poly Real  HaiXin Foods

Poor diversification

The 3 months correlation between Poly and HaiXin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Poly Real Estate and HaiXin Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HaiXin Foods and Poly Real 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 Poly Real Estate are associated (or correlated) with HaiXin Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HaiXin Foods has no effect on the direction of Poly Real i.e., Poly Real and HaiXin Foods go up and down completely randomly.

Pair Corralation between Poly Real and HaiXin Foods

Assuming the 90 days trading horizon Poly Real is expected to generate 2.11 times less return on investment than HaiXin Foods. But when comparing it to its historical volatility, Poly Real Estate is 1.11 times less risky than HaiXin Foods. It trades about 0.17 of its potential returns per unit of risk. HaiXin Foods Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  307.00  in HaiXin Foods Co on September 12, 2024 and sell it today you would earn a total of  283.00  from holding HaiXin Foods Co or generate 92.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Poly Real Estate  vs.  HaiXin Foods Co

Poly Real Estate

Risk-Adjusted Performance

13 of 100

Good

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

HaiXin Foods

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HaiXin Foods Co are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HaiXin Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Poly Real and HaiXin Foods

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

The idea behind Poly Real Estate and HaiXin Foods 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.