Correlation Between Hubeiyichang Transportation and Puya Semiconductor

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

By analyzing existing cross correlation between Hubeiyichang Transportation Group and Puya Semiconductor Shanghai, you can compare the effects of market volatilities on Hubeiyichang Transportation and Puya 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 Hubeiyichang Transportation with a short position of Puya Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Puya Semiconductor.

Diversification Opportunities for Hubeiyichang Transportation and Puya Semiconductor

-0.23

Correlation Coefficient

Hubeiyichang Transportation  Puya Semiconductor

Very good diversification

The 3 months correlation between Hubeiyichang and Puya is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Puya Semiconductor Shanghai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puya Semiconductor and Hubeiyichang Transportation 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 Hubeiyichang Transportation Group are associated (or correlated) with Puya Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puya Semiconductor has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Puya Semiconductor go up and down completely randomly.

Pair Corralation between Hubeiyichang Transportation and Puya Semiconductor

Assuming the 90 days trading horizon Hubeiyichang Transportation Group is expected to under-perform the Puya Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Hubeiyichang Transportation Group is 2.98 times less risky than Puya Semiconductor. The stock trades about -0.1 of its potential returns per unit of risk. The Puya Semiconductor Shanghai is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,464  in Puya Semiconductor Shanghai on December 2, 2024 and sell it today you would earn a total of  2,423  from holding Puya Semiconductor Shanghai or generate 25.6% return on investment over 90 days.

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

Hubeiyichang Transportation Gr  vs.  Puya Semiconductor Shanghai

Hubeiyichang Transportation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubeiyichang Transportation Group 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.

Puya Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Puya Semiconductor Shanghai are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Puya Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hubeiyichang Transportation and Puya Semiconductor

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

The idea behind Hubeiyichang Transportation Group and Puya Semiconductor Shanghai 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.