Correlation Between Semiconductor Ultrasector and Astor Longshort

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

By analyzing existing cross correlation between Semiconductor Ultrasector Profund and Astor Longshort Fund, you can compare the effects of market volatilities on Semiconductor Ultrasector and Astor Longshort 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 Semiconductor Ultrasector with a short position of Astor Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Ultrasector and Astor Longshort.

Diversification Opportunities for Semiconductor Ultrasector and Astor Longshort

0.47

Correlation Coefficient

Semiconductor Ultrasector  Astor Longshort

Very weak diversification

The 3 months correlation between Semiconductor and Astor is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Ultrasector Prof and Astor Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astor Longshort and Semiconductor Ultrasector 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 Semiconductor Ultrasector Profund are associated (or correlated) with Astor Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astor Longshort has no effect on the direction of Semiconductor Ultrasector i.e., Semiconductor Ultrasector and Astor Longshort go up and down completely randomly.

Pair Corralation between Semiconductor Ultrasector and Astor Longshort

Assuming the 90 days horizon Semiconductor Ultrasector Profund is expected to under-perform the Astor Longshort. In addition to that, Semiconductor Ultrasector is 10.25 times more volatile than Astor Longshort Fund. It trades about -0.02 of its total potential returns per unit of risk. Astor Longshort Fund is currently generating about 0.12 per unit of volatility. If you would invest  1,408  in Astor Longshort Fund on September 20, 2024 and sell it today you would earn a total of  9.00  from holding Astor Longshort Fund or generate 0.64% return on investment over 90 days.

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

Semiconductor Ultrasector Prof  vs.  Astor Longshort Fund

Semiconductor Ultrasector

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Ultrasector Profund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Semiconductor Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

Astor Longshort

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Astor Longshort Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Astor Longshort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semiconductor Ultrasector and Astor Longshort

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

The idea behind Semiconductor Ultrasector Profund and Astor Longshort Fund 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.