Correlation Between Zhen Ding and UPI Semiconductor

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

By analyzing existing cross correlation between Zhen Ding Technology and uPI Semiconductor Corp, you can compare the effects of market volatilities on Zhen Ding and UPI 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 Zhen Ding with a short position of UPI Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhen Ding and UPI Semiconductor.

Diversification Opportunities for Zhen Ding and UPI Semiconductor

-0.55

Correlation Coefficient

Zhen Ding  UPI Semiconductor

Excellent diversification

The 3 months correlation between Zhen and UPI is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Zhen Ding Technology and uPI Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on uPI Semiconductor Corp and Zhen Ding 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 Zhen Ding Technology are associated (or correlated) with UPI Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of uPI Semiconductor Corp has no effect on the direction of Zhen Ding i.e., Zhen Ding and UPI Semiconductor go up and down completely randomly.

Pair Corralation between Zhen Ding and UPI Semiconductor

Assuming the 90 days trading horizon Zhen Ding is expected to generate 2.36 times less return on investment than UPI Semiconductor. But when comparing it to its historical volatility, Zhen Ding Technology is 1.25 times less risky than UPI Semiconductor. It trades about 0.05 of its potential returns per unit of risk. uPI Semiconductor Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  22,800  in uPI Semiconductor Corp on October 12, 2024 and sell it today you would earn a total of  1,000.00  from holding uPI Semiconductor Corp or generate 4.39% return on investment over 90 days.

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

Zhen Ding Technology  vs.  uPI Semiconductor Corp

Zhen Ding Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhen Ding Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Zhen Ding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

uPI Semiconductor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days uPI Semiconductor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, UPI Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Zhen Ding and UPI Semiconductor

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

The idea behind Zhen Ding Technology and uPI 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.