Correlation Between Puya Semiconductor and China Asset

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

Diversification Opportunities for Puya Semiconductor and China Asset

0.81

Correlation Coefficient

Puya Semiconductor  China Asset

Very poor diversification

The 3 months correlation between Puya and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Puya Semiconductor Shanghai and China Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Asset Management 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 China Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Asset Management has no effect on the direction of Puya Semiconductor i.e., Puya Semiconductor and China Asset go up and down completely randomly.

Pair Corralation between Puya Semiconductor and China Asset

Assuming the 90 days trading horizon Puya Semiconductor Shanghai is expected to generate 4.49 times more return on investment than China Asset. However, Puya Semiconductor is 4.49 times more volatile than China Asset Management. It trades about 0.12 of its potential returns per unit of risk. China Asset Management is currently generating about 0.35 per unit of risk. If you would invest  8,988  in Puya Semiconductor Shanghai on October 25, 2024 and sell it today you would earn a total of  3,064  from holding Puya Semiconductor Shanghai or generate 34.09% return on investment over 90 days.

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

Puya Semiconductor Shanghai  vs.  China Asset Management

Puya Semiconductor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Puya Semiconductor Shanghai are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Puya Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

China Asset Management

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in China Asset Management are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Asset sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Puya Semiconductor and China Asset

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

The idea behind Puya Semiconductor Shanghai and China Asset Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.