Correlation Between Dawning Information and Yuanjie Semiconductor

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

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

Diversification Opportunities for Dawning Information and Yuanjie Semiconductor

0.01

Correlation Coefficient

Dawning Information  Yuanjie Semiconductor

Significant diversification

The 3 months correlation between Dawning and Yuanjie is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dawning Information Industry and Yuanjie Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanjie Semiconductor and Dawning Information 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 Dawning Information Industry 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 Dawning Information i.e., Dawning Information and Yuanjie Semiconductor go up and down completely randomly.

Pair Corralation between Dawning Information and Yuanjie Semiconductor

Assuming the 90 days trading horizon Dawning Information Industry is expected to generate 0.71 times more return on investment than Yuanjie Semiconductor. However, Dawning Information Industry is 1.41 times less risky than Yuanjie Semiconductor. It trades about -0.1 of its potential returns per unit of risk. Yuanjie Semiconductor Technology is currently generating about -0.08 per unit of risk. If you would invest  7,901  in Dawning Information Industry on December 26, 2024 and sell it today you would lose (1,368) from holding Dawning Information Industry or give up 17.31% of portfolio value over 90 days.

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

Dawning Information Industry  vs.  Yuanjie Semiconductor Technolo

Dawning Information

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dawning Information Industry 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.

Yuanjie Semiconductor

Risk-Adjusted Performance

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 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.

Pair Trading with Dawning Information and Yuanjie Semiconductor

The main advantage of trading using opposite Dawning Information and Yuanjie Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawning Information 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 Dawning Information Industry 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.