Correlation Between Heilongjiang Transport and Semiconductor Manufacturing

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

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

Diversification Opportunities for Heilongjiang Transport and Semiconductor Manufacturing

0.94

Correlation Coefficient

Heilongjiang Transport  Semiconductor Manufacturing

Almost no diversification

The 3 months correlation between Heilongjiang and Semiconductor is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Heilongjiang Transport 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 Heilongjiang Transport Development 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 Heilongjiang Transport i.e., Heilongjiang Transport and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Heilongjiang Transport and Semiconductor Manufacturing

Assuming the 90 days trading horizon Heilongjiang Transport is expected to generate 1.59 times less return on investment than Semiconductor Manufacturing. But when comparing it to its historical volatility, Heilongjiang Transport Development is 1.52 times less risky than Semiconductor Manufacturing. It trades about 0.23 of its potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  335.00  in Semiconductor Manufacturing Electronics on September 16, 2024 and sell it today you would earn a total of  241.00  from holding Semiconductor Manufacturing Electronics or generate 71.94% return on investment over 90 days.

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

Heilongjiang Transport Develop  vs.  Semiconductor Manufacturing El

Heilongjiang Transport

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Heilongjiang Transport Development are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heilongjiang Transport sustained solid returns over the last few months and may actually be approaching a breakup point.

Semiconductor Manufacturing

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Semiconductor Manufacturing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heilongjiang Transport and Semiconductor Manufacturing

The main advantage of trading using opposite Heilongjiang Transport and Semiconductor Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heilongjiang Transport 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 Heilongjiang Transport Development and Semiconductor Manufacturing Electronics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.