Correlation Between Nexchip Semiconductor and Sanxiang Advanced

Can any of the company-specific risk be diversified away by investing in both Nexchip Semiconductor and Sanxiang Advanced 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 Sanxiang Advanced 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 Sanxiang Advanced Materials, you can compare the effects of market volatilities on Nexchip Semiconductor and Sanxiang Advanced 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 Sanxiang Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexchip Semiconductor and Sanxiang Advanced.

Diversification Opportunities for Nexchip Semiconductor and Sanxiang Advanced

-0.2

Correlation Coefficient

Nexchip Semiconductor  Sanxiang Advanced

Good diversification

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

Pair Corralation between Nexchip Semiconductor and Sanxiang Advanced

Assuming the 90 days trading horizon Nexchip Semiconductor Corp is expected to under-perform the Sanxiang Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Nexchip Semiconductor Corp is 1.71 times less risky than Sanxiang Advanced. The stock trades about -0.07 of its potential returns per unit of risk. The Sanxiang Advanced Materials is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,650  in Sanxiang Advanced Materials on December 26, 2024 and sell it today you would earn a total of  663.00  from holding Sanxiang Advanced Materials or generate 40.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Nexchip Semiconductor Corp  vs.  Sanxiang Advanced Materials

Nexchip Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexchip Semiconductor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sanxiang Advanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanxiang Advanced Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanxiang Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexchip Semiconductor and Sanxiang Advanced

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

The idea behind Nexchip Semiconductor Corp and Sanxiang Advanced Materials 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.