Correlation Between Nexchip Semiconductor and Jiangsu Broadcasting

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

By analyzing existing cross correlation between Nexchip Semiconductor Corp and Jiangsu Broadcasting Cable, you can compare the effects of market volatilities on Nexchip Semiconductor and Jiangsu Broadcasting 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 Jiangsu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexchip Semiconductor and Jiangsu Broadcasting.

Diversification Opportunities for Nexchip Semiconductor and Jiangsu Broadcasting

0.77

Correlation Coefficient

Nexchip Semiconductor  Jiangsu Broadcasting

Poor diversification

The 3 months correlation between Nexchip and Jiangsu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nexchip Semiconductor Corp and Jiangsu Broadcasting Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Broadcasting 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 Jiangsu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Broadcasting has no effect on the direction of Nexchip Semiconductor i.e., Nexchip Semiconductor and Jiangsu Broadcasting go up and down completely randomly.

Pair Corralation between Nexchip Semiconductor and Jiangsu Broadcasting

Assuming the 90 days trading horizon Nexchip Semiconductor Corp is expected to generate 1.65 times more return on investment than Jiangsu Broadcasting. However, Nexchip Semiconductor is 1.65 times more volatile than Jiangsu Broadcasting Cable. It trades about 0.08 of its potential returns per unit of risk. Jiangsu Broadcasting Cable is currently generating about 0.02 per unit of risk. If you would invest  1,937  in Nexchip Semiconductor Corp on October 10, 2024 and sell it today you would earn a total of  302.00  from holding Nexchip Semiconductor Corp or generate 15.59% return on investment over 90 days.

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

Nexchip Semiconductor Corp  vs.  Jiangsu Broadcasting Cable

Nexchip Semiconductor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexchip Semiconductor Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nexchip Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Jiangsu Broadcasting

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Broadcasting Cable are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangsu Broadcasting is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nexchip Semiconductor and Jiangsu Broadcasting

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

The idea behind Nexchip Semiconductor Corp and Jiangsu Broadcasting Cable 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.