Correlation Between Cooper Stnd and China XD

Can any of the company-specific risk be diversified away by investing in both Cooper Stnd and China XD 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 Cooper Stnd and China XD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cooper Stnd and China XD Plastics, you can compare the effects of market volatilities on Cooper Stnd and China XD 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 Cooper Stnd with a short position of China XD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Stnd and China XD.

Diversification Opportunities for Cooper Stnd and China XD

0.14

Correlation Coefficient

Cooper Stnd  China XD

Average diversification

The 3 months correlation between Cooper and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Stnd and China XD Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China XD Plastics and Cooper Stnd 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 Cooper Stnd are associated (or correlated) with China XD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China XD Plastics has no effect on the direction of Cooper Stnd i.e., Cooper Stnd and China XD go up and down completely randomly.

Pair Corralation between Cooper Stnd and China XD

If you would invest  1,533  in Cooper Stnd on January 25, 2024 and sell it today you would earn a total of  12.00  from holding Cooper Stnd or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Cooper Stnd  vs.  China XD Plastics

Cooper Stnd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cooper Stnd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cooper Stnd is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

China XD Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cooper Stnd and China XD

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

The idea behind Cooper Stnd and China XD Plastics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.