Correlation Between Union Semiconductor and Zhangjiagang Freetrade

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

Diversification Opportunities for Union Semiconductor and Zhangjiagang Freetrade

0.34

Correlation Coefficient

Union Semiconductor  Zhangjiagang Freetrade

Weak diversification

The 3 months correlation between Union and Zhangjiagang is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Union Semiconductor Co and Zhangjiagang Freetrade Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangjiagang Freetrade 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 Zhangjiagang Freetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangjiagang Freetrade has no effect on the direction of Union Semiconductor i.e., Union Semiconductor and Zhangjiagang Freetrade go up and down completely randomly.

Pair Corralation between Union Semiconductor and Zhangjiagang Freetrade

Assuming the 90 days trading horizon Union Semiconductor Co is expected to under-perform the Zhangjiagang Freetrade. In addition to that, Union Semiconductor is 1.43 times more volatile than Zhangjiagang Freetrade Science. It trades about -0.17 of its total potential returns per unit of risk. Zhangjiagang Freetrade Science is currently generating about 0.04 per unit of volatility. If you would invest  356.00  in Zhangjiagang Freetrade Science on October 22, 2024 and sell it today you would earn a total of  4.00  from holding Zhangjiagang Freetrade Science or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Union Semiconductor Co  vs.  Zhangjiagang Freetrade Science

Union Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Semiconductor Co 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.

Zhangjiagang Freetrade

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhangjiagang Freetrade Science are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Zhangjiagang Freetrade may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Union Semiconductor and Zhangjiagang Freetrade

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

The idea behind Union Semiconductor Co and Zhangjiagang Freetrade Science 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.