Correlation Between Yuanjie Semiconductor and China National

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

Diversification Opportunities for Yuanjie Semiconductor and China National

0.31

Correlation Coefficient

Yuanjie Semiconductor  China National

Weak diversification

The 3 months correlation between Yuanjie and China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Yuanjie Semiconductor Technolo and China National Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Electric 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 China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Electric has no effect on the direction of Yuanjie Semiconductor i.e., Yuanjie Semiconductor and China National go up and down completely randomly.

Pair Corralation between Yuanjie Semiconductor and China National

Assuming the 90 days trading horizon Yuanjie Semiconductor Technology is expected to generate 2.24 times more return on investment than China National. However, Yuanjie Semiconductor is 2.24 times more volatile than China National Electric. It trades about -0.07 of its potential returns per unit of risk. China National Electric is currently generating about -0.26 per unit of risk. If you would invest  14,439  in Yuanjie Semiconductor Technology on October 9, 2024 and sell it today you would lose (962.00) from holding Yuanjie Semiconductor Technology or give up 6.66% of portfolio value over 90 days.

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

Yuanjie Semiconductor Technolo  vs.  China National Electric

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.

China National Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China National Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, China National 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 China National

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

The idea behind Yuanjie Semiconductor Technology and China National Electric 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.