Correlation Between Xinjiang Baodi and Nexchip Semiconductor

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

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

Diversification Opportunities for Xinjiang Baodi and Nexchip Semiconductor

0.56

Correlation Coefficient

Xinjiang Baodi  Nexchip Semiconductor

Very weak diversification

The 3 months correlation between Xinjiang and Nexchip is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining and Nexchip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexchip Semiconductor and Xinjiang Baodi 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 Xinjiang Baodi Mining are associated (or correlated) with Nexchip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexchip Semiconductor has no effect on the direction of Xinjiang Baodi i.e., Xinjiang Baodi and Nexchip Semiconductor go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Nexchip Semiconductor

Assuming the 90 days trading horizon Xinjiang Baodi Mining is expected to generate 1.47 times more return on investment than Nexchip Semiconductor. However, Xinjiang Baodi is 1.47 times more volatile than Nexchip Semiconductor Corp. It trades about -0.08 of its potential returns per unit of risk. Nexchip Semiconductor Corp is currently generating about -0.13 per unit of risk. If you would invest  662.00  in Xinjiang Baodi Mining on October 23, 2024 and sell it today you would lose (38.00) from holding Xinjiang Baodi Mining or give up 5.74% of portfolio value over 90 days.

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

Xinjiang Baodi Mining  vs.  Nexchip Semiconductor Corp

Xinjiang Baodi Mining

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Xinjiang Baodi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nexchip Semiconductor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexchip Semiconductor Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nexchip Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xinjiang Baodi and Nexchip Semiconductor

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

The idea behind Xinjiang Baodi Mining and Nexchip 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..