Correlation Between Yuanjie Semiconductor and Sinotrans

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

Diversification Opportunities for Yuanjie Semiconductor and Sinotrans

0.19

Correlation Coefficient

Yuanjie Semiconductor  Sinotrans

Average diversification

The 3 months correlation between Yuanjie and Sinotrans is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Yuanjie Semiconductor Technolo and Sinotrans Ltd Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotrans Class 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 Sinotrans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotrans Class has no effect on the direction of Yuanjie Semiconductor i.e., Yuanjie Semiconductor and Sinotrans go up and down completely randomly.

Pair Corralation between Yuanjie Semiconductor and Sinotrans

Assuming the 90 days trading horizon Yuanjie Semiconductor Technology is expected to generate 3.38 times more return on investment than Sinotrans. However, Yuanjie Semiconductor is 3.38 times more volatile than Sinotrans Ltd Class. It trades about 0.18 of its potential returns per unit of risk. Sinotrans Ltd Class is currently generating about 0.03 per unit of risk. If you would invest  13,172  in Yuanjie Semiconductor Technology on October 22, 2024 and sell it today you would earn a total of  1,726  from holding Yuanjie Semiconductor Technology or generate 13.1% return on investment over 90 days.

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

Yuanjie Semiconductor Technolo  vs.  Sinotrans Ltd Class

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.

Sinotrans Class

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yuanjie Semiconductor and Sinotrans

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

The idea behind Yuanjie Semiconductor Technology and Sinotrans Ltd Class 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.