% | $
Quotes you view appear here for quick access.

Xinyuan Real Estate Co., Ltd. Message Board

  • john.hertford john.hertford Nov 8, 2012 4:32 PM Flag

    XIN & the DOW

    I recently noticed some Einsteins complaining about the US markets dragging down XIN. Since I spent some time in a beige room with similarly interesting people today I bothered disproving that with some simple analysis:

    The correlation coefficient (r) is a measure of the correlation between two variables where -1 indicates an extremely strong negative correlation, 1 an extremely strong positive correlation and 0 no correlation at all.
    Discarding the disastrous first years of XINs US listing we start our analysis with 2010. This is a really small sample.

    For XIN and DOW between 2010 and today r = -0.0792.

    This means as one variable decreases the other increases, and vice versa, and so suggests XIN is actually a hedge against a weak DOW (lololol)! It should be noted though the correlation is extremely weak and probably completely arbitrary, a standard error, and most likely not statistically significant at any meaningful level. Its a joke.

    Lets say that for some reason beyond our comprehension (or perhaps the US project, or mention thereof, or some sort of new liberal Chinese leader, or whatever) XIN and the DOW became more correlated. So lets take a look at the year to date (which is a ridiculously small sample, but whatever):

    r = 0.0281

    So, I hear you scream, "But John, XIN is like ULTRA - volatile can that be like a meaningful comparison??" and you are completely right. So lets moderate r for beta:

    r = 0.187

    More meaningful? Yes. Meaningful? No. Why is that? 1. The sample size is much to small, even smaller than a fiscal year. 2. Without testing it my educated guess is that r is probably meaningful at the 10-20% level of significance, so we have a 10-20% of making a Type 1 error meaning XIN and the DOW are actually not related at all in the above percentage of cases. 3. Even if the result is significant, the correlation is still extremely small and, oh yeah, the sample is much too small.

    So rationally - No, the US markets or more specifically the DOW probably do not impact XIN.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
6.08+0.06(+1.00%)Aug 29 4:02 PMEDT