Correlation Between CRH Plc and Xinyi Glass

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

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

Diversification Opportunities for CRH Plc and Xinyi Glass

0.63

Correlation Coefficient

CRH Plc  Xinyi Glass

Poor diversification

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

Pair Corralation between CRH Plc and Xinyi Glass

If you would invest  86.00  in Xinyi Glass Holdings on August 31, 2024 and sell it today you would earn a total of  19.00  from holding Xinyi Glass Holdings or generate 22.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

CRH Plc  vs.  Xinyi Glass Holdings

CRH Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRH Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, CRH Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Xinyi Glass Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xinyi Glass Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Xinyi Glass reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CRH Plc and Xinyi Glass

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

The idea behind CRH Plc and Xinyi Glass 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.