Correlation Between National Silicon and Shanghai Yanpu

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

Diversification Opportunities for National Silicon and Shanghai Yanpu

0.0

Correlation Coefficient

National Silicon  Shanghai Yanpu

Pay attention - limited upside

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

Pair Corralation between National Silicon and Shanghai Yanpu

If you would invest (100.00) in Shanghai Yanpu Metal on October 4, 2024 and sell it today you would earn a total of  100.00  from holding Shanghai Yanpu Metal 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.  Shanghai Yanpu Metal

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.

Shanghai Yanpu Metal

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Shanghai Yanpu Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shanghai Yanpu 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 Shanghai Yanpu

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

The idea behind National Silicon Industry and Shanghai Yanpu Metal 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.