Correlation Between Shanghai Commercial and UPI Semiconductor

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

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

Diversification Opportunities for Shanghai Commercial and UPI Semiconductor

-0.46

Correlation Coefficient

Shanghai Commercial  UPI Semiconductor

Very good diversification

The 3 months correlation between Shanghai and UPI is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Commercial Savings 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 Shanghai Commercial 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 Shanghai Commercial Savings 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 Shanghai Commercial i.e., Shanghai Commercial and UPI Semiconductor go up and down completely randomly.

Pair Corralation between Shanghai Commercial and UPI Semiconductor

Assuming the 90 days trading horizon Shanghai Commercial Savings is expected to generate 0.47 times more return on investment than UPI Semiconductor. However, Shanghai Commercial Savings is 2.15 times less risky than UPI Semiconductor. It trades about 0.23 of its potential returns per unit of risk. uPI Semiconductor Corp is currently generating about -0.12 per unit of risk. If you would invest  3,980  in Shanghai Commercial Savings on December 29, 2024 and sell it today you would earn a total of  555.00  from holding Shanghai Commercial Savings or generate 13.94% return on investment over 90 days.

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

Shanghai Commercial Savings  vs.  uPI Semiconductor Corp

Shanghai Commercial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai Commercial Savings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Shanghai Commercial showed solid returns over the last few months and may actually be approaching a breakup point.

uPI Semiconductor Corp

Risk-Adjusted Performance

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Shanghai Commercial and UPI Semiconductor

The main advantage of trading using opposite Shanghai Commercial and UPI Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Commercial 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 Shanghai Commercial Savings 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.