Correlation Between Huaxia Fund and Semiconductor Manufacturing

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

By analyzing existing cross correlation between Huaxia Fund Management and Semiconductor Manufacturing Intl, you can compare the effects of market volatilities on Huaxia Fund and Semiconductor Manufacturing 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 Huaxia Fund with a short position of Semiconductor Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaxia Fund and Semiconductor Manufacturing.

Diversification Opportunities for Huaxia Fund and Semiconductor Manufacturing

0.2

Correlation Coefficient

Huaxia Fund  Semiconductor Manufacturing

Modest diversification

The 3 months correlation between Huaxia and Semiconductor is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Huaxia Fund Management and Semiconductor Manufacturing In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Huaxia Fund 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 Huaxia Fund Management are associated (or correlated) with Semiconductor Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Manufacturing has no effect on the direction of Huaxia Fund i.e., Huaxia Fund and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Huaxia Fund and Semiconductor Manufacturing

Assuming the 90 days trading horizon Huaxia Fund Management is expected to generate 0.37 times more return on investment than Semiconductor Manufacturing. However, Huaxia Fund Management is 2.69 times less risky than Semiconductor Manufacturing. It trades about 0.29 of its potential returns per unit of risk. Semiconductor Manufacturing Intl is currently generating about 0.05 per unit of risk. If you would invest  250.00  in Huaxia Fund Management on October 25, 2024 and sell it today you would earn a total of  61.00  from holding Huaxia Fund Management or generate 24.4% return on investment over 90 days.

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

Huaxia Fund Management  vs.  Semiconductor Manufacturing In

Huaxia Fund Management

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Huaxia Fund Management are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Huaxia Fund sustained solid returns over the last few months and may actually be approaching a breakup point.

Semiconductor Manufacturing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Intl are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Semiconductor Manufacturing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Huaxia Fund and Semiconductor Manufacturing

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

The idea behind Huaxia Fund Management and Semiconductor Manufacturing Intl 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.