Correlation Between International Container and Xinyi Glass

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

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

Diversification Opportunities for International Container and Xinyi Glass

-0.11

Correlation Coefficient

International Container  Xinyi Glass

Good diversification

The 3 months correlation between International and Xinyi is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding International Container Termin 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 International Container 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 International Container Terminal 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 International Container i.e., International Container and Xinyi Glass go up and down completely randomly.

Pair Corralation between International Container and Xinyi Glass

Assuming the 90 days horizon International Container Terminal is expected to under-perform the Xinyi Glass. But the pink sheet apears to be less risky and, when comparing its historical volatility, International Container Terminal is 1.33 times less risky than Xinyi Glass. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Xinyi Glass Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Xinyi Glass Holdings on September 15, 2024 and sell it today you would earn a total of  21.00  from holding Xinyi Glass Holdings or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

International Container Termin  vs.  Xinyi Glass Holdings

International Container

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Container Terminal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, International Container is not utilizing all of its potentials. The current 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 International Container and Xinyi Glass

The main advantage of trading using opposite International Container and Xinyi Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Container 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 International Container Terminal 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.