Correlation Between JCHX Mining and Nexchip Semiconductor

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

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

Diversification Opportunities for JCHX Mining and Nexchip Semiconductor

0.08

Correlation Coefficient

JCHX Mining  Nexchip Semiconductor

Significant diversification

The 3 months correlation between JCHX and Nexchip is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JCHX Mining Management and Nexchip Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexchip Semiconductor and JCHX Mining 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 JCHX Mining Management 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 JCHX Mining i.e., JCHX Mining and Nexchip Semiconductor go up and down completely randomly.

Pair Corralation between JCHX Mining and Nexchip Semiconductor

Assuming the 90 days trading horizon JCHX Mining is expected to generate 10.12 times less return on investment than Nexchip Semiconductor. But when comparing it to its historical volatility, JCHX Mining Management is 1.49 times less risky than Nexchip Semiconductor. It trades about 0.04 of its potential returns per unit of risk. Nexchip Semiconductor Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,446  in Nexchip Semiconductor Corp on September 5, 2024 and sell it today you would earn a total of  1,315  from holding Nexchip Semiconductor Corp or generate 90.94% return on investment over 90 days.

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

JCHX Mining Management  vs.  Nexchip Semiconductor Corp

JCHX Mining Management

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JCHX Mining Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JCHX Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nexchip Semiconductor

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexchip Semiconductor Corp are ranked lower than 19 (%) 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 JCHX Mining and Nexchip Semiconductor

The main advantage of trading using opposite JCHX Mining and Nexchip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JCHX Mining 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 JCHX Mining Management 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.