Correlation Between Nexchip Semiconductor and Liaoning Chengda
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By analyzing existing cross correlation between Nexchip Semiconductor Corp and Liaoning Chengda Biotechnology, you can compare the effects of market volatilities on Nexchip Semiconductor and Liaoning Chengda 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 Liaoning Chengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexchip Semiconductor and Liaoning Chengda.
Diversification Opportunities for Nexchip Semiconductor and Liaoning Chengda
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nexchip and Liaoning is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nexchip Semiconductor Corp and Liaoning Chengda Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Chengda Bio 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 Liaoning Chengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Chengda Bio has no effect on the direction of Nexchip Semiconductor i.e., Nexchip Semiconductor and Liaoning Chengda go up and down completely randomly.
Pair Corralation between Nexchip Semiconductor and Liaoning Chengda
Assuming the 90 days trading horizon Nexchip Semiconductor Corp is expected to generate 2.16 times more return on investment than Liaoning Chengda. However, Nexchip Semiconductor is 2.16 times more volatile than Liaoning Chengda Biotechnology. It trades about 0.11 of its potential returns per unit of risk. Liaoning Chengda Biotechnology is currently generating about -0.09 per unit of risk. If you would invest 2,548 in Nexchip Semiconductor Corp on September 12, 2024 and sell it today you would earn a total of 181.00 from holding Nexchip Semiconductor Corp or generate 7.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Nexchip Semiconductor Corp vs. Liaoning Chengda Biotechnology
Performance |
Timeline |
Nexchip Semiconductor |
Liaoning Chengda Bio |
Nexchip Semiconductor and Liaoning Chengda Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nexchip Semiconductor and Liaoning Chengda
The main advantage of trading using opposite Nexchip Semiconductor and Liaoning Chengda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexchip Semiconductor position performs unexpectedly, Liaoning Chengda 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 Liaoning Chengda will offset losses from the drop in Liaoning Chengda's long position.Nexchip Semiconductor vs. Gansu Jiu Steel | Nexchip Semiconductor vs. Shandong Mining Machinery | Nexchip Semiconductor vs. Aba Chemicals Corp | Nexchip Semiconductor vs. BlueFocus Communication Group |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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