Correlation Between Xinyuan Real and Sino Land

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

By analyzing existing cross correlation between Xinyuan Real Estate and Sino Land Co, you can compare the effects of market volatilities on Xinyuan Real and Sino Land 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 Xinyuan Real with a short position of Sino Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyuan Real and Sino Land.

Diversification Opportunities for Xinyuan Real and Sino Land

0.54

Correlation Coefficient

Xinyuan Real  Sino Land

Very weak diversification

The 3 months correlation between Xinyuan and Sino is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Xinyuan Real Estate and Sino Land Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Land and Xinyuan Real 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 Xinyuan Real Estate are associated (or correlated) with Sino Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Land has no effect on the direction of Xinyuan Real i.e., Xinyuan Real and Sino Land go up and down completely randomly.

Pair Corralation between Xinyuan Real and Sino Land

Considering the 90-day investment horizon Xinyuan Real Estate is expected to generate 3.34 times more return on investment than Sino Land. However, Xinyuan Real is 3.34 times more volatile than Sino Land Co. It trades about 0.04 of its potential returns per unit of risk. Sino Land Co is currently generating about 0.04 per unit of risk. If you would invest  264.00  in Xinyuan Real Estate on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Xinyuan Real Estate or generate 0.0% return on investment over 90 days.

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

Xinyuan Real Estate  vs.  Sino Land Co

Xinyuan Real Estate

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xinyuan Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Xinyuan Real displayed solid returns over the last few months and may actually be approaching a breakup point.

Sino Land

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Land Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Sino Land may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Xinyuan Real and Sino Land

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

The idea behind Xinyuan Real Estate and Sino Land Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.