Correlation Between Xiangyang Automobile and Formidable ETF

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

By analyzing existing cross correlation between Xiangyang Automobile Bearing and Formidable ETF, you can compare the effects of market volatilities on Xiangyang Automobile and Formidable ETF 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 Xiangyang Automobile with a short position of Formidable ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyang Automobile and Formidable ETF.

Diversification Opportunities for Xiangyang Automobile and Formidable ETF

-0.49

Correlation Coefficient

Xiangyang Automobile  Formidable ETF

Very good diversification

The 3 months correlation between Xiangyang and Formidable is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyang Automobile Bearing and Formidable ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formidable ETF and Xiangyang Automobile 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 Xiangyang Automobile Bearing are associated (or correlated) with Formidable ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formidable ETF has no effect on the direction of Xiangyang Automobile i.e., Xiangyang Automobile and Formidable ETF go up and down completely randomly.

Pair Corralation between Xiangyang Automobile and Formidable ETF

Assuming the 90 days trading horizon Xiangyang Automobile Bearing is expected to generate 3.82 times more return on investment than Formidable ETF. However, Xiangyang Automobile is 3.82 times more volatile than Formidable ETF. It trades about 0.09 of its potential returns per unit of risk. Formidable ETF is currently generating about -0.01 per unit of risk. If you would invest  437.00  in Xiangyang Automobile Bearing on September 18, 2024 and sell it today you would earn a total of  231.00  from holding Xiangyang Automobile Bearing or generate 52.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.41%
Values	Daily Returns

Xiangyang Automobile Bearing  vs.  Formidable ETF

Xiangyang Automobile

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyang Automobile Bearing are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiangyang Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Formidable ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Xiangyang Automobile and Formidable ETF

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

The idea behind Xiangyang Automobile Bearing and Formidable ETF 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.