Correlation Between Changzhou Almaden and Nexchip Semiconductor

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Can any of the company-specific risk be diversified away by investing in both Changzhou Almaden and Nexchip 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 Changzhou Almaden and Nexchip Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Changzhou Almaden Co and Nexchip Semiconductor Corp, you can compare the effects of market volatilities on Changzhou Almaden and Nexchip 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 Changzhou Almaden with a short position of Nexchip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changzhou Almaden and Nexchip Semiconductor.

Diversification Opportunities for Changzhou Almaden and Nexchip Semiconductor

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Changzhou and Nexchip is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and Nexchip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexchip Semiconductor and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with Nexchip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexchip Semiconductor has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and Nexchip Semiconductor go up and down completely randomly.

Pair Corralation between Changzhou Almaden and Nexchip Semiconductor

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the Nexchip Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 1.58 times less risky than Nexchip Semiconductor. The stock trades about -0.07 of its potential returns per unit of risk. The Nexchip Semiconductor Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,183  in Nexchip Semiconductor Corp on October 22, 2024 and sell it today you would earn a total of  133.00  from holding Nexchip Semiconductor Corp or generate 6.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Changzhou Almaden Co  vs.  Nexchip Semiconductor Corp

 Performance 
       Timeline  
Changzhou Almaden 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Changzhou Almaden Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Nexchip Semiconductor 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Nexchip Semiconductor Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nexchip Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Changzhou Almaden and Nexchip Semiconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Changzhou Almaden and Nexchip Semiconductor

The main advantage of trading using opposite Changzhou Almaden and Nexchip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changzhou Almaden position performs unexpectedly, Nexchip 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 Nexchip Semiconductor will offset losses from the drop in Nexchip Semiconductor's long position.
The idea behind Changzhou Almaden Co and Nexchip Semiconductor Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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