Correlation Between Hwabao WP and Lontium Semiconductor

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

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

Diversification Opportunities for Hwabao WP and Lontium Semiconductor

-0.02

Correlation Coefficient

Hwabao WP  Lontium Semiconductor

Good diversification

The 3 months correlation between Hwabao and Lontium is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hwabao WP CSI and Lontium Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lontium Semiconductor and Hwabao WP 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 Hwabao WP CSI are associated (or correlated) with Lontium Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lontium Semiconductor has no effect on the direction of Hwabao WP i.e., Hwabao WP and Lontium Semiconductor go up and down completely randomly.

Pair Corralation between Hwabao WP and Lontium Semiconductor

Assuming the 90 days trading horizon Hwabao WP CSI is expected to under-perform the Lontium Semiconductor. But the etf apears to be less risky and, when comparing its historical volatility, Hwabao WP CSI is 2.41 times less risky than Lontium Semiconductor. The etf trades about -0.05 of its potential returns per unit of risk. The Lontium Semiconductor Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  7,545  in Lontium Semiconductor Corp on October 22, 2024 and sell it today you would earn a total of  880.00  from holding Lontium Semiconductor Corp or generate 11.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hwabao WP CSI  vs.  Lontium Semiconductor Corp

Hwabao WP CSI

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lontium Semiconductor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lontium Semiconductor Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lontium Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hwabao WP and Lontium Semiconductor

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

The idea behind Hwabao WP CSI and Lontium 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 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.