Correlation Between Shantou Wanshun and Puya Semiconductor

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

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

Diversification Opportunities for Shantou Wanshun and Puya Semiconductor

-0.39

Correlation Coefficient

Shantou Wanshun  Puya Semiconductor

Very good diversification

The 3 months correlation between Shantou and Puya is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Shantou Wanshun Package and Puya Semiconductor Shanghai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puya Semiconductor and Shantou Wanshun 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 Shantou Wanshun Package 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 Shantou Wanshun i.e., Shantou Wanshun and Puya Semiconductor go up and down completely randomly.

Pair Corralation between Shantou Wanshun and Puya Semiconductor

Assuming the 90 days trading horizon Shantou Wanshun Package is expected to under-perform the Puya Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Shantou Wanshun Package is 1.44 times less risky than Puya Semiconductor. The stock trades about -0.02 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  8,052  in Puya Semiconductor Shanghai on October 10, 2024 and sell it today you would earn a total of  2,097  from holding Puya Semiconductor Shanghai or generate 26.04% return on investment over 90 days.

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

Shantou Wanshun Package  vs.  Puya Semiconductor Shanghai

Shantou Wanshun Package

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shantou Wanshun Package has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shantou Wanshun is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Puya Semiconductor

Risk-Adjusted Performance

7 of 100

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 Shantou Wanshun and Puya Semiconductor

The main advantage of trading using opposite Shantou Wanshun and Puya Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shantou Wanshun 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 Shantou Wanshun Package 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.