Correlation Between Yuanjie Semiconductor and Lotus Health

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

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

Diversification Opportunities for Yuanjie Semiconductor and Lotus Health

-0.24

Correlation Coefficient

Yuanjie Semiconductor  Lotus Health

Very good diversification

The 3 months correlation between Yuanjie and Lotus is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Yuanjie Semiconductor Technolo and Lotus Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Health Group and Yuanjie 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 Yuanjie Semiconductor Technology are associated (or correlated) with Lotus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Health Group has no effect on the direction of Yuanjie Semiconductor i.e., Yuanjie Semiconductor and Lotus Health go up and down completely randomly.

Pair Corralation between Yuanjie Semiconductor and Lotus Health

Assuming the 90 days trading horizon Yuanjie Semiconductor Technology is expected to generate 1.63 times more return on investment than Lotus Health. However, Yuanjie Semiconductor is 1.63 times more volatile than Lotus Health Group. It trades about 0.04 of its potential returns per unit of risk. Lotus Health Group is currently generating about 0.05 per unit of risk. If you would invest  9,897  in Yuanjie Semiconductor Technology on October 11, 2024 and sell it today you would earn a total of  3,903  from holding Yuanjie Semiconductor Technology or generate 39.44% return on investment over 90 days.

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

Yuanjie Semiconductor Technolo  vs.  Lotus Health Group

Yuanjie Semiconductor

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanjie Semiconductor Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yuanjie Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Lotus Health Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lotus Health Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lotus Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yuanjie Semiconductor and Lotus Health

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

The idea behind Yuanjie Semiconductor Technology and Lotus Health Group 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.