Correlation Between Xinyi Solar and ABCO Energy

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

By analyzing existing cross correlation between Xinyi Solar Holdings and ABCO Energy, you can compare the effects of market volatilities on Xinyi Solar and ABCO Energy 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 Xinyi Solar with a short position of ABCO Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyi Solar and ABCO Energy.

Diversification Opportunities for Xinyi Solar and ABCO Energy

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Correlation Coefficient

Xinyi Solar  ABCO Energy

Pay attention - limited upside

The 3 months correlation between Xinyi and ABCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xinyi Solar Holdings and ABCO Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Energy and Xinyi Solar 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 Xinyi Solar Holdings are associated (or correlated) with ABCO Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Energy has no effect on the direction of Xinyi Solar i.e., Xinyi Solar and ABCO Energy go up and down completely randomly.

Pair Corralation between Xinyi Solar and ABCO Energy

Assuming the 90 days horizon Xinyi Solar Holdings is expected to under-perform the ABCO Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Xinyi Solar Holdings is 6.59 times less risky than ABCO Energy. The pink sheet trades about -0.04 of its potential returns per unit of risk. The ABCO Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.10  in ABCO Energy on September 30, 2024 and sell it today you would lose (0.09) from holding ABCO Energy or give up 90.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Xinyi Solar Holdings  vs.  ABCO Energy

Xinyi Solar Holdings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Xinyi Solar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ABCO Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABCO Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, ABCO Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xinyi Solar and ABCO Energy

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

The idea behind Xinyi Solar Holdings and ABCO Energy 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.