Correlation Between Union Semiconductor and Tianjin Ruixin

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

By analyzing existing cross correlation between Union Semiconductor Co and Tianjin Ruixin Technology, you can compare the effects of market volatilities on Union Semiconductor and Tianjin Ruixin 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 Union Semiconductor with a short position of Tianjin Ruixin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Semiconductor and Tianjin Ruixin.

Diversification Opportunities for Union Semiconductor and Tianjin Ruixin

0.41

Correlation Coefficient

Union Semiconductor  Tianjin Ruixin

Very weak diversification

The 3 months correlation between Union and Tianjin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Union Semiconductor Co and Tianjin Ruixin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Ruixin Technology and Union 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 Union Semiconductor Co are associated (or correlated) with Tianjin Ruixin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Ruixin Technology has no effect on the direction of Union Semiconductor i.e., Union Semiconductor and Tianjin Ruixin go up and down completely randomly.

Pair Corralation between Union Semiconductor and Tianjin Ruixin

Assuming the 90 days trading horizon Union Semiconductor Co is expected to generate 0.66 times more return on investment than Tianjin Ruixin. However, Union Semiconductor Co is 1.51 times less risky than Tianjin Ruixin. It trades about 0.1 of its potential returns per unit of risk. Tianjin Ruixin Technology is currently generating about -0.03 per unit of risk. If you would invest  917.00  in Union Semiconductor Co on December 7, 2024 and sell it today you would earn a total of  117.00  from holding Union Semiconductor Co or generate 12.76% return on investment over 90 days.

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

Union Semiconductor Co  vs.  Tianjin Ruixin Technology

Union Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Union Semiconductor Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Union Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Tianjin Ruixin Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tianjin Ruixin Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tianjin Ruixin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Union Semiconductor and Tianjin Ruixin

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

The idea behind Union Semiconductor Co and Tianjin Ruixin Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.