Correlation Between China Marine and Yuanjie Semiconductor

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

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

Diversification Opportunities for China Marine and Yuanjie Semiconductor

0.69

Correlation Coefficient

China Marine  Yuanjie Semiconductor

Poor diversification

The 3 months correlation between China and Yuanjie is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Marine Information and Yuanjie Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanjie Semiconductor and China Marine 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 China Marine Information are associated (or correlated) with Yuanjie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanjie Semiconductor has no effect on the direction of China Marine i.e., China Marine and Yuanjie Semiconductor go up and down completely randomly.

Pair Corralation between China Marine and Yuanjie Semiconductor

Assuming the 90 days trading horizon China Marine Information is expected to generate 0.8 times more return on investment than Yuanjie Semiconductor. However, China Marine Information is 1.25 times less risky than Yuanjie Semiconductor. It trades about 0.0 of its potential returns per unit of risk. Yuanjie Semiconductor Technology is currently generating about -0.02 per unit of risk. If you would invest  2,667  in China Marine Information on October 8, 2024 and sell it today you would lose (116.00) from holding China Marine Information or give up 4.35% of portfolio value over 90 days.

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

China Marine Information  vs.  Yuanjie Semiconductor Technolo

China Marine Information

Risk-Adjusted Performance

0 of 100

Very Weak

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

Yuanjie Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yuanjie Semiconductor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with China Marine and Yuanjie Semiconductor

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

The idea behind China Marine Information and Yuanjie Semiconductor Technology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.