Correlation Between Sony and Xiaomi Corp
Can any of the company-specific risk be diversified away by investing in both Sony and Xiaomi Corp 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 Sony and Xiaomi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Xiaomi Corp ADR, you can compare the effects of market volatilities on Sony and Xiaomi Corp 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 Sony with a short position of Xiaomi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Xiaomi Corp.
Diversification Opportunities for Sony and Xiaomi Corp
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sony and Xiaomi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Xiaomi Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp ADR and Sony 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 Sony Group are associated (or correlated) with Xiaomi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi Corp ADR has no effect on the direction of Sony i.e., Sony and Xiaomi Corp go up and down completely randomly.
Pair Corralation between Sony and Xiaomi Corp
If you would invest 928.00 in Xiaomi Corp ADR on January 20, 2024 and sell it today you would earn a total of 118.00 from holding Xiaomi Corp ADR or generate 12.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 0.0% |
Values | Daily Returns |
Sony Group vs. Xiaomi Corp ADR
Performance |
Timeline |
Sony Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Xiaomi Corp ADR |
Sony and Xiaomi Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sony and Xiaomi Corp
The main advantage of trading using opposite Sony and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, Xiaomi Corp 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 Corp will offset losses from the drop in Xiaomi Corp's long position.The idea behind Sony Group and Xiaomi Corp ADR 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.Xiaomi Corp vs. LG Display Co | Xiaomi Corp vs. Sonos Inc | Xiaomi Corp vs. Vizio Holding Corp | Xiaomi Corp vs. Sharp Corp ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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