Correlation Between Nexchip Semiconductor and Xinxiang Chemical
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By analyzing existing cross correlation between Nexchip Semiconductor Corp and Xinxiang Chemical Fiber, you can compare the effects of market volatilities on Nexchip Semiconductor and Xinxiang Chemical 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 Nexchip Semiconductor with a short position of Xinxiang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexchip Semiconductor and Xinxiang Chemical.
Diversification Opportunities for Nexchip Semiconductor and Xinxiang Chemical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexchip and Xinxiang is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nexchip Semiconductor Corp and Xinxiang Chemical Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinxiang Chemical Fiber and Nexchip 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 Nexchip Semiconductor Corp are associated (or correlated) with Xinxiang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinxiang Chemical Fiber has no effect on the direction of Nexchip Semiconductor i.e., Nexchip Semiconductor and Xinxiang Chemical go up and down completely randomly.
Pair Corralation between Nexchip Semiconductor and Xinxiang Chemical
Assuming the 90 days trading horizon Nexchip Semiconductor Corp is expected to under-perform the Xinxiang Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Nexchip Semiconductor Corp is 1.37 times less risky than Xinxiang Chemical. The stock trades about -0.1 of its potential returns per unit of risk. The Xinxiang Chemical Fiber is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 417.00 in Xinxiang Chemical Fiber on October 30, 2024 and sell it today you would lose (7.00) from holding Xinxiang Chemical Fiber or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexchip Semiconductor Corp vs. Xinxiang Chemical Fiber
Performance |
| Timeline |
| Nexchip Semiconductor |
| Xinxiang Chemical Fiber |
Nexchip Semiconductor and Xinxiang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexchip Semiconductor and Xinxiang Chemical
The main advantage of trading using opposite Nexchip Semiconductor and Xinxiang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexchip Semiconductor position performs unexpectedly, Xinxiang Chemical 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 Xinxiang Chemical will offset losses from the drop in Xinxiang Chemical's long position.The idea behind Nexchip Semiconductor Corp and Xinxiang Chemical Fiber 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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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.
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