Correlation Between Chengdu Xinzhu and Advanced Micro

Can any of the company-specific risk be diversified away by investing in both Chengdu Xinzhu and Advanced Micro 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 Xinzhu and Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chengdu Xinzhu RoadBridge and Advanced Micro Fabrication, you can compare the effects of market volatilities on Chengdu Xinzhu and Advanced Micro 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 Xinzhu with a short position of Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xinzhu and Advanced Micro.

Diversification Opportunities for Chengdu Xinzhu and Advanced Micro

0.52

Correlation Coefficient

Chengdu Xinzhu  Advanced Micro

Very weak diversification

The 3 months correlation between Chengdu and Advanced is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xinzhu RoadBridge and Advanced Micro Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Fabri and Chengdu Xinzhu 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 Xinzhu RoadBridge are associated (or correlated) with Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Fabri has no effect on the direction of Chengdu Xinzhu i.e., Chengdu Xinzhu and Advanced Micro go up and down completely randomly.

Pair Corralation between Chengdu Xinzhu and Advanced Micro

Assuming the 90 days trading horizon Chengdu Xinzhu RoadBridge is expected to generate 1.91 times more return on investment than Advanced Micro. However, Chengdu Xinzhu is 1.91 times more volatile than Advanced Micro Fabrication. It trades about -0.08 of its potential returns per unit of risk. Advanced Micro Fabrication is currently generating about -0.32 per unit of risk. If you would invest  505.00  in Chengdu Xinzhu RoadBridge on October 6, 2024 and sell it today you would lose (40.00) from holding Chengdu Xinzhu RoadBridge or give up 7.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Chengdu Xinzhu RoadBridge  vs.  Advanced Micro Fabrication

Chengdu Xinzhu RoadBridge

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chengdu Xinzhu RoadBridge are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengdu Xinzhu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Advanced Micro Fabri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Micro Fabrication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Advanced Micro 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 Xinzhu and Advanced Micro

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

The idea behind Chengdu Xinzhu RoadBridge and Advanced Micro Fabrication 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.