Correlation Between Shenzhen Zhongzhuang and Union Semiconductor

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

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

Diversification Opportunities for Shenzhen Zhongzhuang and Union Semiconductor

0.21

Correlation Coefficient

Shenzhen Zhongzhuang  Union Semiconductor

Modest diversification

The 3 months correlation between Shenzhen and Union is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Union Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Semiconductor and Shenzhen Zhongzhuang 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 Shenzhen Zhongzhuang Construction 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 Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Union Semiconductor go up and down completely randomly.

Pair Corralation between Shenzhen Zhongzhuang and Union Semiconductor

Assuming the 90 days trading horizon Shenzhen Zhongzhuang is expected to generate 2.13 times less return on investment than Union Semiconductor. In addition to that, Shenzhen Zhongzhuang is 1.2 times more volatile than Union Semiconductor Co. It trades about 0.0 of its total potential returns per unit of risk. Union Semiconductor Co is currently generating about 0.0 per unit of volatility. If you would invest  928.00  in Union Semiconductor Co on October 7, 2024 and sell it today you would lose (87.00) from holding Union Semiconductor Co or give up 9.37% of portfolio value over 90 days.

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

Shenzhen Zhongzhuang Construct  vs.  Union Semiconductor Co

Shenzhen Zhongzhuang

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Zhongzhuang Construction are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Zhongzhuang sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Shenzhen Zhongzhuang and Union Semiconductor

The main advantage of trading using opposite Shenzhen Zhongzhuang and Union Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Zhongzhuang 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 Shenzhen Zhongzhuang Construction 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 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.