Correlation Between ChengDu Hi and Will Semiconductor

Can any of the company-specific risk be diversified away by investing in both ChengDu Hi and Will Semiconductor 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 ChengDu Hi and Will Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ChengDu Hi Tech Development and Will Semiconductor Co, you can compare the effects of market volatilities on ChengDu Hi and Will Semiconductor 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 ChengDu Hi with a short position of Will Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChengDu Hi and Will Semiconductor.

Diversification Opportunities for ChengDu Hi and Will Semiconductor

0.68

Correlation Coefficient

ChengDu Hi  Will Semiconductor

Poor diversification

The 3 months correlation between ChengDu and Will is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ChengDu Hi Tech Development and Will Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Will Semiconductor and ChengDu Hi 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 ChengDu Hi Tech Development are associated (or correlated) with Will Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Will Semiconductor has no effect on the direction of ChengDu Hi i.e., ChengDu Hi and Will Semiconductor go up and down completely randomly.

Pair Corralation between ChengDu Hi and Will Semiconductor

Assuming the 90 days trading horizon ChengDu Hi Tech Development is expected to under-perform the Will Semiconductor. In addition to that, ChengDu Hi is 1.75 times more volatile than Will Semiconductor Co. It trades about -0.09 of its total potential returns per unit of risk. Will Semiconductor Co is currently generating about -0.04 per unit of volatility. If you would invest  11,154  in Will Semiconductor Co on October 23, 2024 and sell it today you would lose (668.00) from holding Will Semiconductor Co or give up 5.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ChengDu Hi Tech Development  vs.  Will Semiconductor Co

ChengDu Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChengDu Hi Tech Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Will Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Will Semiconductor Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Will Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ChengDu Hi and Will Semiconductor

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

The idea behind ChengDu Hi Tech Development and Will Semiconductor Co 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.