Correlation Between Semiconductor Manufacturing and Hubei Xingfa
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By analyzing existing cross correlation between Semiconductor Manufacturing Electronics and Hubei Xingfa Chemicals, you can compare the effects of market volatilities on Semiconductor Manufacturing and Hubei Xingfa 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 Manufacturing with a short position of Hubei Xingfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Hubei Xingfa.
Diversification Opportunities for Semiconductor Manufacturing and Hubei Xingfa
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Semiconductor and Hubei is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Hubei Xingfa Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Xingfa Chemicals and Semiconductor Manufacturing 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 Manufacturing Electronics are associated (or correlated) with Hubei Xingfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Xingfa Chemicals has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Hubei Xingfa go up and down completely randomly.
Pair Corralation between Semiconductor Manufacturing and Hubei Xingfa
Assuming the 90 days trading horizon Semiconductor Manufacturing is expected to generate 2.76 times less return on investment than Hubei Xingfa. In addition to that, Semiconductor Manufacturing is 1.1 times more volatile than Hubei Xingfa Chemicals. It trades about 0.01 of its total potential returns per unit of risk. Hubei Xingfa Chemicals is currently generating about 0.04 per unit of volatility. If you would invest 1,965 in Hubei Xingfa Chemicals on August 26, 2024 and sell it today you would earn a total of 322.00 from holding Hubei Xingfa Chemicals or generate 16.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semiconductor Manufacturing El vs. Hubei Xingfa Chemicals
Performance |
| Timeline |
| Semiconductor Manufacturing |
| Hubei Xingfa Chemicals |
Semiconductor Manufacturing and Hubei Xingfa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semiconductor Manufacturing and Hubei Xingfa
The main advantage of trading using opposite Semiconductor Manufacturing and Hubei Xingfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Manufacturing position performs unexpectedly, Hubei Xingfa 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 Hubei Xingfa will offset losses from the drop in Hubei Xingfa's long position.The idea behind Semiconductor Manufacturing Electronics and Hubei Xingfa Chemicals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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