Correlation Between Southchip Semiconductor and Hunan Airbluer

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

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

Diversification Opportunities for Southchip Semiconductor and Hunan Airbluer

-0.21

Correlation Coefficient

Southchip Semiconductor  Hunan Airbluer

Very good diversification

The 3 months correlation between Southchip and Hunan is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Southchip Semiconductor Techno and Hunan Airbluer Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Airbluer Envir and Southchip 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 Southchip Semiconductor Technology are associated (or correlated) with Hunan Airbluer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Airbluer Envir has no effect on the direction of Southchip Semiconductor i.e., Southchip Semiconductor and Hunan Airbluer go up and down completely randomly.

Pair Corralation between Southchip Semiconductor and Hunan Airbluer

Assuming the 90 days trading horizon Southchip Semiconductor Technology is expected to generate 0.81 times more return on investment than Hunan Airbluer. However, Southchip Semiconductor Technology is 1.24 times less risky than Hunan Airbluer. It trades about -0.02 of its potential returns per unit of risk. Hunan Airbluer Environmental is currently generating about -0.08 per unit of risk. If you would invest  3,918  in Southchip Semiconductor Technology on December 25, 2024 and sell it today you would lose (179.00) from holding Southchip Semiconductor Technology or give up 4.57% of portfolio value over 90 days.

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

Southchip Semiconductor Techno  vs.  Hunan Airbluer Environmental

Southchip Semiconductor

Risk-Adjusted Performance

Very Weak

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

Hunan Airbluer Envir

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hunan Airbluer Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Southchip Semiconductor and Hunan Airbluer

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

The idea behind Southchip Semiconductor Technology and Hunan Airbluer Environmental 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.