Correlation Between Nexchip Semiconductor and Longxing Chemical
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By analyzing existing cross correlation between Nexchip Semiconductor Corp and Longxing Chemical Stock, you can compare the effects of market volatilities on Nexchip Semiconductor and Longxing Chemical 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 Nexchip Semiconductor with a short position of Longxing Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexchip Semiconductor and Longxing Chemical.
Diversification Opportunities for Nexchip Semiconductor and Longxing Chemical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexchip and Longxing is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nexchip Semiconductor Corp and Longxing Chemical Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longxing Chemical Stock and Nexchip Semiconductor 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 Nexchip Semiconductor Corp are associated (or correlated) with Longxing Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longxing Chemical Stock has no effect on the direction of Nexchip Semiconductor i.e., Nexchip Semiconductor and Longxing Chemical go up and down completely randomly.
Pair Corralation between Nexchip Semiconductor and Longxing Chemical
Assuming the 90 days trading horizon Nexchip Semiconductor Corp is expected to under-perform the Longxing Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Nexchip Semiconductor Corp is 1.61 times less risky than Longxing Chemical. The stock trades about -0.37 of its potential returns per unit of risk. The Longxing Chemical Stock is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 560.00 in Longxing Chemical Stock on October 11, 2024 and sell it today you would lose (13.00) from holding Longxing Chemical Stock or give up 2.32% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Nexchip Semiconductor Corp vs. Longxing Chemical Stock
Performance |
Timeline |
Nexchip Semiconductor |
Longxing Chemical Stock |
Nexchip Semiconductor and Longxing Chemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nexchip Semiconductor and Longxing Chemical
The main advantage of trading using opposite Nexchip Semiconductor and Longxing Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexchip Semiconductor position performs unexpectedly, Longxing Chemical 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 Longxing Chemical will offset losses from the drop in Longxing Chemical's long position.The idea behind Nexchip Semiconductor Corp and Longxing Chemical Stock 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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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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