Correlation Between Will Semiconductor and Anhui Jianghuai

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

By analyzing existing cross correlation between Will Semiconductor Co and Anhui Jianghuai Automobile, you can compare the effects of market volatilities on Will Semiconductor and Anhui Jianghuai 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 Will Semiconductor with a short position of Anhui Jianghuai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Will Semiconductor and Anhui Jianghuai.

Diversification Opportunities for Will Semiconductor and Anhui Jianghuai

-0.04

Correlation Coefficient

Will Semiconductor  Anhui Jianghuai

Good diversification

The 3 months correlation between Will and Anhui is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Will Semiconductor Co and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto and Will Semiconductor 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 Will Semiconductor Co are associated (or correlated) with Anhui Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of Will Semiconductor i.e., Will Semiconductor and Anhui Jianghuai go up and down completely randomly.

Pair Corralation between Will Semiconductor and Anhui Jianghuai

Assuming the 90 days trading horizon Will Semiconductor Co is expected to generate 1.06 times more return on investment than Anhui Jianghuai. However, Will Semiconductor is 1.06 times more volatile than Anhui Jianghuai Automobile. It trades about 0.01 of its potential returns per unit of risk. Anhui Jianghuai Automobile is currently generating about -0.21 per unit of risk. If you would invest  9,995  in Will Semiconductor Co on October 12, 2024 and sell it today you would earn a total of  1.00  from holding Will Semiconductor Co or generate 0.01% return on investment over 90 days.

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

Will Semiconductor Co  vs.  Anhui Jianghuai Automobile

Will Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Will Semiconductor Co 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.

Anhui Jianghuai Auto

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Jianghuai Automobile are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Jianghuai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Will Semiconductor and Anhui Jianghuai

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

The idea behind Will Semiconductor Co and Anhui Jianghuai Automobile 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.

Check out your portfolio center.

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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.