Correlation Between Xiaomi Corp and Methode Electronics
Can any of the company-specific risk be diversified away by investing in both Xiaomi Corp and Methode Electronics 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 Xiaomi Corp and Methode Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiaomi Corp ADR and Methode Electronics, you can compare the effects of market volatilities on Xiaomi Corp and Methode Electronics 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 Xiaomi Corp with a short position of Methode Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi Corp and Methode Electronics.
Diversification Opportunities for Xiaomi Corp and Methode Electronics
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xiaomi and Methode is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi Corp ADR and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and Xiaomi Corp 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 Xiaomi Corp ADR are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of Xiaomi Corp i.e., Xiaomi Corp and Methode Electronics go up and down completely randomly.
Pair Corralation between Xiaomi Corp and Methode Electronics
Assuming the 90 days horizon Xiaomi Corp ADR is expected to generate 0.68 times more return on investment than Methode Electronics. However, Xiaomi Corp ADR is 1.47 times less risky than Methode Electronics. It trades about 0.12 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.04 per unit of risk. If you would invest 779.00 in Xiaomi Corp ADR on April 24, 2025 and sell it today you would earn a total of 2,911 from holding Xiaomi Corp ADR or generate 373.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiaomi Corp ADR vs. Methode Electronics
Performance |
| Timeline |
| Xiaomi Corp ADR |
| Methode Electronics |
Xiaomi Corp and Methode Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiaomi Corp and Methode Electronics
The main advantage of trading using opposite Xiaomi Corp and Methode Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiaomi Corp position performs unexpectedly, Methode Electronics 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 Methode Electronics will offset losses from the drop in Methode Electronics' long position.| Xiaomi Corp vs. Apple Inc | Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. Sony Corp | Xiaomi Corp vs. Xiaomi Corp |
| Methode Electronics vs. Sanmina | Methode Electronics vs. Benchmark Electronics | Methode Electronics vs. OSI Systems | Methode Electronics vs. Celestica |
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 the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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