Correlation Between Xtep International and Hashicorp

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Can any of the company-specific risk be diversified away by investing in both Xtep International and Hashicorp 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 Xtep International and Hashicorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtep International Holdings and Hashicorp, you can compare the effects of market volatilities on Xtep International and Hashicorp 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 Xtep International with a short position of Hashicorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtep International and Hashicorp.

Diversification Opportunities for Xtep International and Hashicorp

-0.17
  Correlation Coefficient

Good diversification

The 3 months correlation between XTEPY and Hashicorp is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Xtep International Holdings and Hashicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hashicorp and Xtep International 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 Xtep International Holdings are associated (or correlated) with Hashicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hashicorp has no effect on the direction of Xtep International i.e., Xtep International and Hashicorp go up and down completely randomly.

Pair Corralation between Xtep International and Hashicorp

Assuming the 90 days horizon Xtep International Holdings is expected to generate 0.35 times more return on investment than Hashicorp. However, Xtep International Holdings is 2.88 times less risky than Hashicorp. It trades about 0.08 of its potential returns per unit of risk. Hashicorp is currently generating about -0.04 per unit of risk. If you would invest  12,757  in Xtep International Holdings on September 5, 2022 and sell it today you would earn a total of  5,843  from holding Xtep International Holdings or generate 45.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Xtep International Holdings  vs.  Hashicorp

 Performance (%) 
       Timeline  
Xtep International 
XTEPY Performance
0 of 100
Over the last 90 days Xtep International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Xtep International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

XTEPY Price Channel

Hashicorp 
Hashicorp Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hashicorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Hashicorp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the insiders.

Hashicorp Price Channel

Xtep International and Hashicorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xtep International and Hashicorp

The main advantage of trading using opposite Xtep International and Hashicorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtep International position performs unexpectedly, Hashicorp 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 Hashicorp will offset losses from the drop in Hashicorp's long position.
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The idea behind Xtep International Holdings and Hashicorp 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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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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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