Correlation Between Changzhou Almaden and Union Semiconductor

Can any of the company-specific risk be diversified away by investing in both Changzhou Almaden and Union 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 Union 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 Union Semiconductor Co, you can compare the effects of market volatilities on Changzhou Almaden and Union 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 Union Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changzhou Almaden and Union Semiconductor.

Diversification Opportunities for Changzhou Almaden and Union Semiconductor

0.52

Correlation Coefficient

Changzhou Almaden  Union Semiconductor

Very weak diversification

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

Pair Corralation between Changzhou Almaden and Union Semiconductor

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the Union Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 1.02 times less risky than Union Semiconductor. The stock trades about -0.26 of its potential returns per unit of risk. The Union Semiconductor Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  919.00  in Union Semiconductor Co on October 7, 2024 and sell it today you would lose (78.00) from holding Union Semiconductor Co or give up 8.49% of portfolio value over 90 days.

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

Changzhou Almaden Co  vs.  Union Semiconductor Co

Changzhou Almaden

Risk-Adjusted Performance

0 of 100

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 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.

Union Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Semiconductor Co 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.

Pair Trading with Changzhou Almaden and Union Semiconductor

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

The idea behind Changzhou Almaden Co and Union 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.