Correlation Between Xiangyang Automobile and Keeley Mid

Can any of the company-specific risk be diversified away by investing in both Xiangyang Automobile and Keeley Mid 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 Keeley Mid 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 Keeley Mid Cap, you can compare the effects of market volatilities on Xiangyang Automobile and Keeley Mid 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 Keeley Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyang Automobile and Keeley Mid.

Diversification Opportunities for Xiangyang Automobile and Keeley Mid

0.86

Correlation Coefficient

Xiangyang Automobile  Keeley Mid

Very poor diversification

The 3 months correlation between Xiangyang and Keeley is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyang Automobile Bearing and Keeley Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley Mid Cap 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 Keeley Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeley Mid Cap has no effect on the direction of Xiangyang Automobile i.e., Xiangyang Automobile and Keeley Mid go up and down completely randomly.

Pair Corralation between Xiangyang Automobile and Keeley Mid

Assuming the 90 days trading horizon Xiangyang Automobile is expected to generate 1.38 times less return on investment than Keeley Mid. In addition to that, Xiangyang Automobile is 3.25 times more volatile than Keeley Mid Cap. It trades about 0.01 of its total potential returns per unit of risk. Keeley Mid Cap is currently generating about 0.04 per unit of volatility. If you would invest  2,720  in Keeley Mid Cap on August 22, 2024 and sell it today you would earn a total of  560.00  from holding Keeley Mid Cap or generate 20.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.17%
Values	Daily Returns

Xiangyang Automobile Bearing  vs.  Keeley Mid Cap

Xiangyang Automobile

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xiangyang Automobile Bearing are ranked lower than 11 (%) 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.

Keeley Mid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Keeley Mid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Keeley Mid may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Xiangyang Automobile and Keeley Mid

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

The idea behind Xiangyang Automobile Bearing and Keeley Mid Cap 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.