Correlation Between China Nonferrous and Will Semiconductor

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Can any of the company-specific risk be diversified away by investing in both China Nonferrous and Will Semiconductor 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 China Nonferrous and Will Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Nonferrous Metal and Will Semiconductor Co, you can compare the effects of market volatilities on China Nonferrous and Will Semiconductor 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 China Nonferrous with a short position of Will Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Nonferrous and Will Semiconductor.

Diversification Opportunities for China Nonferrous and Will Semiconductor

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between China and Will is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Nonferrous Metal and Will Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Will Semiconductor and China Nonferrous 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 China Nonferrous Metal are associated (or correlated) with Will Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Will Semiconductor has no effect on the direction of China Nonferrous i.e., China Nonferrous and Will Semiconductor go up and down completely randomly.

Pair Corralation between China Nonferrous and Will Semiconductor

Assuming the 90 days trading horizon China Nonferrous Metal is expected to generate 1.15 times more return on investment than Will Semiconductor. However, China Nonferrous is 1.15 times more volatile than Will Semiconductor Co. It trades about 0.05 of its potential returns per unit of risk. Will Semiconductor Co is currently generating about -0.16 per unit of risk. If you would invest  503.00  in China Nonferrous Metal on September 1, 2024 and sell it today you would earn a total of  12.00  from holding China Nonferrous Metal or generate 2.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.65%
ValuesDaily Returns

China Nonferrous Metal  vs.  Will Semiconductor Co

 Performance 
       Timeline  
China Nonferrous Metal 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in China Nonferrous Metal are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Nonferrous sustained solid returns over the last few months and may actually be approaching a breakup point.
Will Semiconductor 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Will Semiconductor Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Will Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

China Nonferrous and Will Semiconductor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Nonferrous and Will Semiconductor

The main advantage of trading using opposite China Nonferrous and Will Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Nonferrous position performs unexpectedly, Will Semiconductor 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 Will Semiconductor will offset losses from the drop in Will Semiconductor's long position.
The idea behind China Nonferrous Metal and Will Semiconductor Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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