Correlation Between Sonos and XIAOMI

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

By analyzing existing cross correlation between Sonos Inc and XIAOMI 3375 29 APR 30, you can compare the effects of market volatilities on Sonos and XIAOMI 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 Sonos with a short position of XIAOMI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonos and XIAOMI.

Diversification Opportunities for Sonos and XIAOMI

0.66

Correlation Coefficient

Sonos  XIAOMI

Poor diversification

The 3 months correlation between Sonos and XIAOMI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sonos Inc and XIAOMI 3375 29 APR 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAOMI 3375 29 and Sonos 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 Sonos Inc are associated (or correlated) with XIAOMI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAOMI 3375 29 has no effect on the direction of Sonos i.e., Sonos and XIAOMI go up and down completely randomly.

Pair Corralation between Sonos and XIAOMI

Given the investment horizon of 90 days Sonos Inc is expected to generate 4.05 times more return on investment than XIAOMI. However, Sonos is 4.05 times more volatile than XIAOMI 3375 29 APR 30. It trades about 0.13 of its potential returns per unit of risk. XIAOMI 3375 29 APR 30 is currently generating about -0.29 per unit of risk. If you would invest  1,219  in Sonos Inc on September 18, 2024 and sell it today you would earn a total of  238.00  from holding Sonos Inc or generate 19.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	19.05%
Values	Daily Returns

Sonos Inc  vs.  XIAOMI 3375 29 APR 30

Sonos Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonos Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Sonos displayed solid returns over the last few months and may actually be approaching a breakup point.

XIAOMI 3375 29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XIAOMI 3375 29 APR 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for XIAOMI 3375 29 APR 30 investors.

Pair Trading with Sonos and XIAOMI

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

The idea behind Sonos Inc and XIAOMI 3375 29 APR 30 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.