Correlation Between Puya Semiconductor and Zhejiang Yayi

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

By analyzing existing cross correlation between Puya Semiconductor Shanghai and Zhejiang Yayi Metal, you can compare the effects of market volatilities on Puya Semiconductor and Zhejiang Yayi 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 Puya Semiconductor with a short position of Zhejiang Yayi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puya Semiconductor and Zhejiang Yayi.

Diversification Opportunities for Puya Semiconductor and Zhejiang Yayi

0.4

Correlation Coefficient

Puya Semiconductor  Zhejiang Yayi

Very weak diversification

The 3 months correlation between Puya and Zhejiang is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Puya Semiconductor Shanghai and Zhejiang Yayi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Yayi Metal and Puya 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 Puya Semiconductor Shanghai are associated (or correlated) with Zhejiang Yayi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Yayi Metal has no effect on the direction of Puya Semiconductor i.e., Puya Semiconductor and Zhejiang Yayi go up and down completely randomly.

Pair Corralation between Puya Semiconductor and Zhejiang Yayi

Assuming the 90 days trading horizon Puya Semiconductor is expected to generate 2.59 times less return on investment than Zhejiang Yayi. In addition to that, Puya Semiconductor is 2.0 times more volatile than Zhejiang Yayi Metal. It trades about 0.01 of its total potential returns per unit of risk. Zhejiang Yayi Metal is currently generating about 0.04 per unit of volatility. If you would invest  2,400  in Zhejiang Yayi Metal on December 24, 2024 and sell it today you would earn a total of  86.00  from holding Zhejiang Yayi Metal or generate 3.58% return on investment over 90 days.

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

Puya Semiconductor Shanghai  vs.  Zhejiang Yayi Metal

Puya Semiconductor

Risk-Adjusted Performance

Very Weak

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

Zhejiang Yayi Metal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zhejiang Yayi Metal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhejiang Yayi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Puya Semiconductor and Zhejiang Yayi

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

The idea behind Puya Semiconductor Shanghai and Zhejiang Yayi Metal 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.