Correlation Between Semiconductor Manufacturing and Anhui Gujing

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Can any of the company-specific risk be diversified away by investing in both Semiconductor Manufacturing and Anhui Gujing 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 Semiconductor Manufacturing and Anhui Gujing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semiconductor Manufacturing Electronics and Anhui Gujing Distillery, you can compare the effects of market volatilities on Semiconductor Manufacturing and Anhui Gujing 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 Semiconductor Manufacturing with a short position of Anhui Gujing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Anhui Gujing.

Diversification Opportunities for Semiconductor Manufacturing and Anhui Gujing

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Semiconductor and Anhui is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Anhui Gujing Distillery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Gujing Distillery and Semiconductor Manufacturing 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 Semiconductor Manufacturing Electronics are associated (or correlated) with Anhui Gujing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Gujing Distillery has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Anhui Gujing go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Anhui Gujing

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 1.02 times more return on investment than Anhui Gujing. However, Semiconductor Manufacturing is 1.02 times more volatile than Anhui Gujing Distillery. It trades about -0.01 of its potential returns per unit of risk. Anhui Gujing Distillery is currently generating about -0.03 per unit of risk. If you would invest  569.00  in Semiconductor Manufacturing Electronics on October 17, 2024 and sell it today you would lose (105.00) from holding Semiconductor Manufacturing Electronics or give up 18.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy86.25%
ValuesDaily Returns

Semiconductor Manufacturing El  vs.  Anhui Gujing Distillery

 Performance 
       Timeline  
Semiconductor Manufacturing 

Risk-Adjusted Performance

4 of 100

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

Risk-Adjusted Performance

0 of 100

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

Semiconductor Manufacturing and Anhui Gujing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Semiconductor Manufacturing and Anhui Gujing

The main advantage of trading using opposite Semiconductor Manufacturing and Anhui Gujing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Manufacturing position performs unexpectedly, Anhui Gujing 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 Anhui Gujing will offset losses from the drop in Anhui Gujing's long position.
The idea behind Semiconductor Manufacturing Electronics and Anhui Gujing Distillery 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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