Correlation Between Xinjiang Goldwind and Next Hydrogen

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

By analyzing existing cross correlation between Xinjiang Goldwind Science and Next Hydrogen Solutions, you can compare the effects of market volatilities on Xinjiang Goldwind and Next Hydrogen 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 Xinjiang Goldwind with a short position of Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Goldwind and Next Hydrogen.

Diversification Opportunities for Xinjiang Goldwind and Next Hydrogen

0.02

Correlation Coefficient

Xinjiang Goldwind  Next Hydrogen

Significant diversification

The 3 months correlation between Xinjiang and Next is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Goldwind Science and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions and Xinjiang Goldwind 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 Xinjiang Goldwind Science are associated (or correlated) with Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Xinjiang Goldwind i.e., Xinjiang Goldwind and Next Hydrogen go up and down completely randomly.

Pair Corralation between Xinjiang Goldwind and Next Hydrogen

Assuming the 90 days horizon Xinjiang Goldwind is expected to generate 1.56 times less return on investment than Next Hydrogen. But when comparing it to its historical volatility, Xinjiang Goldwind Science is 2.6 times less risky than Next Hydrogen. It trades about 0.14 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Next Hydrogen Solutions on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Next Hydrogen Solutions or generate 3.45% return on investment over 90 days.

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

Xinjiang Goldwind Science  vs.  Next Hydrogen Solutions

Xinjiang Goldwind Science

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Goldwind Science are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Xinjiang Goldwind reported solid returns over the last few months and may actually be approaching a breakup point.

Next Hydrogen Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Next Hydrogen Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Next Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinjiang Goldwind and Next Hydrogen

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

The idea behind Xinjiang Goldwind Science and Next Hydrogen Solutions 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.