Correlation Between Xinyuan Real and Murano Global

Can any of the company-specific risk be diversified away by investing in both Xinyuan Real and Murano Global 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 Xinyuan Real and Murano Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xinyuan Real Estate and Murano Global Investments, you can compare the effects of market volatilities on Xinyuan Real and Murano Global 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 Xinyuan Real with a short position of Murano Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyuan Real and Murano Global.

Diversification Opportunities for Xinyuan Real and Murano Global

0.35

Correlation Coefficient

Xinyuan Real  Murano Global

Weak diversification

The 3 months correlation between Xinyuan and Murano is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Xinyuan Real Estate and Murano Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murano Global Investments and Xinyuan Real 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 Xinyuan Real Estate are associated (or correlated) with Murano Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murano Global Investments has no effect on the direction of Xinyuan Real i.e., Xinyuan Real and Murano Global go up and down completely randomly.

Pair Corralation between Xinyuan Real and Murano Global

Considering the 90-day investment horizon Xinyuan Real is expected to generate 25.85 times less return on investment than Murano Global. But when comparing it to its historical volatility, Xinyuan Real Estate is 4.24 times less risky than Murano Global. It trades about 0.04 of its potential returns per unit of risk. Murano Global Investments is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4.32  in Murano Global Investments on March 8, 2024 and sell it today you would earn a total of  17.68  from holding Murano Global Investments or generate 409.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.13%
Values	Daily Returns

Xinyuan Real Estate  vs.  Murano Global Investments

Xinyuan Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xinyuan Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Xinyuan Real displayed solid returns over the last few months and may actually be approaching a breakup point.

Murano Global Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Murano Global Investments are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Murano Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinyuan Real and Murano Global

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

The idea behind Xinyuan Real Estate and Murano Global Investments 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.