Correlation Between Victory Integrity and X Financial

Can any of the company-specific risk be diversified away by investing in both Victory Integrity and X Financial 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 Victory Integrity and X Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victory Integrity Smallmid Cap and X Financial Class, you can compare the effects of market volatilities on Victory Integrity and X Financial 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 Victory Integrity with a short position of X Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Integrity and X Financial.

Diversification Opportunities for Victory Integrity and X Financial

0.53

Correlation Coefficient

Victory Integrity  X Financial

Very weak diversification

The 3 months correlation between Victory and XYF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Victory Integrity Smallmid Cap and X Financial Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Financial Class and Victory Integrity 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 Victory Integrity Smallmid Cap are associated (or correlated) with X Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Financial Class has no effect on the direction of Victory Integrity i.e., Victory Integrity and X Financial go up and down completely randomly.

Pair Corralation between Victory Integrity and X Financial

Assuming the 90 days horizon Victory Integrity is expected to generate 6.02 times less return on investment than X Financial. But when comparing it to its historical volatility, Victory Integrity Smallmid Cap is 4.6 times less risky than X Financial. It trades about 0.15 of its potential returns per unit of risk. X Financial Class is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  470.00  in X Financial Class on September 12, 2024 and sell it today you would earn a total of  351.00  from holding X Financial Class or generate 74.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Victory Integrity Smallmid Cap  vs.  X Financial Class

Victory Integrity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Integrity Smallmid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Victory Integrity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

X Financial Class

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victory Integrity and X Financial

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

The idea behind Victory Integrity Smallmid Cap and X Financial Class 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.