Correlation Between Yuanjie Semiconductor and Xiamen Bank

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

Diversification Opportunities for Yuanjie Semiconductor and Xiamen Bank

-0.28

Correlation Coefficient

Yuanjie Semiconductor  Xiamen Bank

Very good diversification

The 3 months correlation between Yuanjie and Xiamen is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Yuanjie Semiconductor Technolo and Xiamen Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Bank 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 Xiamen Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Bank has no effect on the direction of Yuanjie Semiconductor i.e., Yuanjie Semiconductor and Xiamen Bank go up and down completely randomly.

Pair Corralation between Yuanjie Semiconductor and Xiamen Bank

Assuming the 90 days trading horizon Yuanjie Semiconductor Technology is expected to under-perform the Xiamen Bank. In addition to that, Yuanjie Semiconductor is 2.48 times more volatile than Xiamen Bank Co. It trades about -0.07 of its total potential returns per unit of risk. Xiamen Bank Co is currently generating about -0.12 per unit of volatility. If you would invest  567.00  in Xiamen Bank Co on October 9, 2024 and sell it today you would lose (23.00) from holding Xiamen Bank Co or give up 4.06% of portfolio value over 90 days.

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

Yuanjie Semiconductor Technolo  vs.  Xiamen Bank Co

Yuanjie Semiconductor

Risk-Adjusted Performance

0 of 100

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.

Xiamen Bank

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen Bank Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Yuanjie Semiconductor and Xiamen Bank

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

The idea behind Yuanjie Semiconductor Technology and Xiamen Bank Co 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.