Correlation Between Nasdaq and Xiamen ITG

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

By analyzing existing cross correlation between Nasdaq Inc and Xiamen ITG Group, you can compare the effects of market volatilities on Nasdaq and Xiamen ITG 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 Nasdaq with a short position of Xiamen ITG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Xiamen ITG.

Diversification Opportunities for Nasdaq and Xiamen ITG

0.06

Correlation Coefficient

Nasdaq  Xiamen ITG

Significant diversification

The 3 months correlation between Nasdaq and Xiamen is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Xiamen ITG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen ITG Group and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Xiamen ITG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen ITG Group has no effect on the direction of Nasdaq i.e., Nasdaq and Xiamen ITG go up and down completely randomly.

Pair Corralation between Nasdaq and Xiamen ITG

Given the investment horizon of 90 days Nasdaq is expected to generate 3.05 times less return on investment than Xiamen ITG. But when comparing it to its historical volatility, Nasdaq Inc is 2.52 times less risky than Xiamen ITG. It trades about 0.08 of its potential returns per unit of risk. Xiamen ITG Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  578.00  in Xiamen ITG Group on September 23, 2024 and sell it today you would earn a total of  85.00  from holding Xiamen ITG Group or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Nasdaq Inc  vs.  Xiamen ITG Group

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Xiamen ITG Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen ITG Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen ITG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Xiamen ITG

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

The idea behind Nasdaq Inc and Xiamen ITG Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.