Correlation Between Yuanjie Semiconductor and Metro Investment

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

Diversification Opportunities for Yuanjie Semiconductor and Metro Investment

YuanjieMetroDiversified AwayYuanjieMetroDiversified Away100%
0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Yuanjie and Metro is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Yuanjie Semiconductor Technolo and Metro Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Investment Dev 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 Metro Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Investment Dev has no effect on the direction of Yuanjie Semiconductor i.e., Yuanjie Semiconductor and Metro Investment go up and down completely randomly.

Pair Corralation between Yuanjie Semiconductor and Metro Investment

Assuming the 90 days trading horizon Yuanjie Semiconductor Technology is expected to generate 1.47 times more return on investment than Metro Investment. However, Yuanjie Semiconductor is 1.47 times more volatile than Metro Investment Development. It trades about -0.02 of its potential returns per unit of risk. Metro Investment Development is currently generating about -0.05 per unit of risk. If you would invest  16,557  in Yuanjie Semiconductor Technology on October 19, 2024 and sell it today you would lose (1,659) from holding Yuanjie Semiconductor Technology or give up 10.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Yuanjie Semiconductor Technolo  vs.  Metro Investment Development

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -100102030
JavaScript chart by amCharts 3.21.15688498 600683
       Timeline  
Yuanjie Semiconductor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Yuanjie Semiconductor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yuanjie Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan130140150160170180190
Metro Investment Dev 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Metro Investment Development 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3.63.844.24.44.64.8

Yuanjie Semiconductor and Metro Investment Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-14.56-10.91-7.25-3.60.06293.777.5411.3215.09 0.010.020.030.04
JavaScript chart by amCharts 3.21.15688498 600683
       Returns  

Pair Trading with Yuanjie Semiconductor and Metro Investment

The main advantage of trading using opposite Yuanjie Semiconductor and Metro Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yuanjie Semiconductor position performs unexpectedly, Metro Investment 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 Metro Investment will offset losses from the drop in Metro Investment's long position.
The idea behind Yuanjie Semiconductor Technology and Metro Investment Development 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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