Correlation Between Xinhua Winshare and Suzhou Oriental

Can any of the company-specific risk be diversified away by investing in both Xinhua Winshare and Suzhou Oriental 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 Xinhua Winshare and Suzhou Oriental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xinhua Winshare Publishing and Suzhou Oriental Semiconductor, you can compare the effects of market volatilities on Xinhua Winshare and Suzhou Oriental 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 Xinhua Winshare with a short position of Suzhou Oriental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinhua Winshare and Suzhou Oriental.

Diversification Opportunities for Xinhua Winshare and Suzhou Oriental

0.18

Correlation Coefficient

Xinhua Winshare  Suzhou Oriental

Average diversification

The 3 months correlation between Xinhua and Suzhou is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and Suzhou Oriental Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Oriental Semi and Xinhua Winshare 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 Xinhua Winshare Publishing are associated (or correlated) with Suzhou Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Oriental Semi has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and Suzhou Oriental go up and down completely randomly.

Pair Corralation between Xinhua Winshare and Suzhou Oriental

Assuming the 90 days trading horizon Xinhua Winshare Publishing is expected to under-perform the Suzhou Oriental. But the stock apears to be less risky and, when comparing its historical volatility, Xinhua Winshare Publishing is 2.06 times less risky than Suzhou Oriental. The stock trades about -0.14 of its potential returns per unit of risk. The Suzhou Oriental Semiconductor is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,667  in Suzhou Oriental Semiconductor on December 24, 2024 and sell it today you would lose (387.00) from holding Suzhou Oriental Semiconductor or give up 8.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Xinhua Winshare Publishing  vs.  Suzhou Oriental Semiconductor

Xinhua Winshare Publ

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinhua Winshare Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Suzhou Oriental Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suzhou Oriental Semiconductor 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 Xinhua Winshare and Suzhou Oriental

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

The idea behind Xinhua Winshare Publishing and Suzhou Oriental Semiconductor 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.