Correlation Between Xiaomi Corp and Kyocera

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

By analyzing existing cross correlation between Xiaomi Corp ADR and Kyocera, you can compare the effects of market volatilities on Xiaomi Corp and Kyocera 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 Xiaomi Corp with a short position of Kyocera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi Corp and Kyocera.

Diversification Opportunities for Xiaomi Corp and Kyocera

-0.63

Correlation Coefficient

Xiaomi Corp  Kyocera

Excellent diversification

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

Pair Corralation between Xiaomi Corp and Kyocera

Assuming the 90 days horizon Xiaomi Corp ADR is expected to generate 1.35 times more return on investment than Kyocera. However, Xiaomi Corp is 1.35 times more volatile than Kyocera. It trades about 0.21 of its potential returns per unit of risk. Kyocera is currently generating about -0.07 per unit of risk. If you would invest  1,210  in Xiaomi Corp ADR on September 3, 2024 and sell it today you would earn a total of  582.00  from holding Xiaomi Corp ADR or generate 48.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Xiaomi Corp ADR  vs.  Kyocera

Xiaomi Corp ADR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xiaomi Corp ADR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Xiaomi Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Kyocera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kyocera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Xiaomi Corp and Kyocera

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

The idea behind Xiaomi Corp ADR and Kyocera 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.