Correlation Between National Silicon and Shenyang Huitian

Can any of the company-specific risk be diversified away by investing in both National Silicon and Shenyang Huitian 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 National Silicon and Shenyang Huitian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Silicon Industry and Shenyang Huitian Thermal, you can compare the effects of market volatilities on National Silicon and Shenyang Huitian 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 National Silicon with a short position of Shenyang Huitian. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Silicon and Shenyang Huitian.

Diversification Opportunities for National Silicon and Shenyang Huitian

0.2

Correlation Coefficient

National Silicon  Shenyang Huitian

Modest diversification

The 3 months correlation between National and Shenyang is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding National Silicon Industry and Shenyang Huitian Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Huitian Thermal and National Silicon 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 National Silicon Industry are associated (or correlated) with Shenyang Huitian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Huitian Thermal has no effect on the direction of National Silicon i.e., National Silicon and Shenyang Huitian go up and down completely randomly.

Pair Corralation between National Silicon and Shenyang Huitian

Assuming the 90 days trading horizon National Silicon Industry is expected to under-perform the Shenyang Huitian. But the stock apears to be less risky and, when comparing its historical volatility, National Silicon Industry is 2.21 times less risky than Shenyang Huitian. The stock trades about -0.33 of its potential returns per unit of risk. The Shenyang Huitian Thermal is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Shenyang Huitian Thermal on October 5, 2024 and sell it today you would lose (27.00) from holding Shenyang Huitian Thermal or give up 7.12% of portfolio value over 90 days.

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

National Silicon Industry  vs.  Shenyang Huitian Thermal

National Silicon Industry

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shenyang Huitian Thermal

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shenyang Huitian Thermal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenyang Huitian may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with National Silicon and Shenyang Huitian

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

The idea behind National Silicon Industry and Shenyang Huitian Thermal 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 Transaction History module to view history of all your transactions and understand their impact on performance.