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Xinyuan Real Estate Co., Ltd. Message Board

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  • stan.ackman stan.ackman Apr 9, 2012 11:03 AM Flag

    Advice From a Long Time Owner of XIN

    As you said, XIN is a micro cap stock, so its price correlation with the market is not very high by using a intraday basis or daily basis. However, XIN's price does correlated highly to China mainland index and the S&P 500 on a monthly basis. If you compare XIN with Vanke on a 5 year frame, you will find their price movements are highly correlated. XIN just significantly underperform compared with Vanke.

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    • I played with some comparison graphs, and you're definitely right.

      By far the closest correlation is between XIN and Vanke, not Xin and (Bidu or Nasdaq or S&P 500). If this chart doesn't come up right, just choose a one year duration and write XIN in the "compare to" box:

      The very strong correlation between XIN and Vanke, right up until the last week or so, should give all short term bulls reason to reconsider. The chart seems to lend pretty solid support to the theory that XIN's recent 40% pop was only due to being mentioned back to back in the WSJ and Motley Fool, rather than any improvement in XIN's business outlook.

      Here's the headache causing problem for short term bulls: if we interpret the jump as being caused by an economic factor, at the same time we would have to explain why that improved economic factor helped XIN, BUT DIDN'T ALSO help Vanke.

      No good explanation for that discrepancy leaps to mind, but I always keep an open mind.

2.98Mar 31 4:06 PMEDT