Correlation Between Hangzhou Arcvideo and Yuanjie Semiconductor

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

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

Diversification Opportunities for Hangzhou Arcvideo and Yuanjie Semiconductor

0.39

Correlation Coefficient

Hangzhou Arcvideo  Yuanjie Semiconductor

Weak diversification

The 3 months correlation between Hangzhou and Yuanjie is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Arcvideo Technology and Yuanjie Semiconductor Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanjie Semiconductor and Hangzhou Arcvideo 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 Hangzhou Arcvideo Technology 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 Hangzhou Arcvideo i.e., Hangzhou Arcvideo and Yuanjie Semiconductor go up and down completely randomly.

Pair Corralation between Hangzhou Arcvideo and Yuanjie Semiconductor

Assuming the 90 days trading horizon Hangzhou Arcvideo is expected to generate 1.56 times less return on investment than Yuanjie Semiconductor. In addition to that, Hangzhou Arcvideo is 1.01 times more volatile than Yuanjie Semiconductor Technology. It trades about 0.01 of its total potential returns per unit of risk. Yuanjie Semiconductor Technology is currently generating about 0.01 per unit of volatility. If you would invest  15,089  in Yuanjie Semiconductor Technology on October 7, 2024 and sell it today you would lose (2,291) from holding Yuanjie Semiconductor Technology or give up 15.18% of portfolio value over 90 days.

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

Hangzhou Arcvideo Technology  vs.  Yuanjie Semiconductor Technolo

Hangzhou Arcvideo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou Arcvideo 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Yuanjie Semiconductor

Risk-Adjusted Performance

0 of 100

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 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 Hangzhou Arcvideo and Yuanjie Semiconductor

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