Correlation Between National Silicon and SuZhou ChunXing

Can any of the company-specific risk be diversified away by investing in both National Silicon and SuZhou ChunXing 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 SuZhou ChunXing 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 SuZhou ChunXing Precision, you can compare the effects of market volatilities on National Silicon and SuZhou ChunXing 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 SuZhou ChunXing. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Silicon and SuZhou ChunXing.

Diversification Opportunities for National Silicon and SuZhou ChunXing

0.0

Correlation Coefficient

National Silicon  SuZhou ChunXing

Pay attention - limited upside

The 3 months correlation between National and SuZhou is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Silicon Industry and SuZhou ChunXing Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SuZhou ChunXing Precision 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 SuZhou ChunXing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SuZhou ChunXing Precision has no effect on the direction of National Silicon i.e., National Silicon and SuZhou ChunXing go up and down completely randomly.

Pair Corralation between National Silicon and SuZhou ChunXing

If you would invest (100.00) in SuZhou ChunXing Precision on December 26, 2024 and sell it today you would earn a total of  100.00  from holding SuZhou ChunXing Precision or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

National Silicon Industry  vs.  SuZhou ChunXing Precision

National Silicon Industry

Risk-Adjusted Performance

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 somewhat strong basic indicators, National Silicon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SuZhou ChunXing Precision

Risk-Adjusted Performance

Very Weak

Over the last 90 days SuZhou ChunXing Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SuZhou ChunXing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Silicon and SuZhou ChunXing

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

The idea behind National Silicon Industry and SuZhou ChunXing Precision 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.