Correlation Between NXP Semiconductors and Hua Hong
Can any of the company-specific risk be diversified away by investing in both NXP Semiconductors and Hua Hong 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 NXP Semiconductors and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXP Semiconductors NV and Hua Hong Semiconductor, you can compare the effects of market volatilities on NXP Semiconductors and Hua Hong 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 NXP Semiconductors with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXP Semiconductors and Hua Hong.
Diversification Opportunities for NXP Semiconductors and Hua Hong
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between NXP and Hua is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding NXP Semiconductors NV and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and NXP Semiconductors 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 NXP Semiconductors NV are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of NXP Semiconductors i.e., NXP Semiconductors and Hua Hong go up and down completely randomly.
Pair Corralation between NXP Semiconductors and Hua Hong
Assuming the 90 days trading horizon NXP Semiconductors NV is expected to under-perform the Hua Hong. But the stock apears to be less risky and, when comparing its historical volatility, NXP Semiconductors NV is 2.5 times less risky than Hua Hong. The stock trades about -0.1 of its potential returns per unit of risk. The Hua Hong Semiconductor is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 244.00 in Hua Hong Semiconductor on October 16, 2024 and sell it today you would earn a total of 24.00 from holding Hua Hong Semiconductor or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXP Semiconductors NV vs. Hua Hong Semiconductor
Performance |
| Timeline |
| NXP Semiconductors |
| Hua Hong Semiconductor |
NXP Semiconductors and Hua Hong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXP Semiconductors and Hua Hong
The main advantage of trading using opposite NXP Semiconductors and Hua Hong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXP Semiconductors position performs unexpectedly, Hua Hong 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 Hua Hong will offset losses from the drop in Hua Hong's long position.| NXP Semiconductors vs. Zijin Mining Group | NXP Semiconductors vs. GRIFFIN MINING LTD | NXP Semiconductors vs. MAGNUM MINING EXP | NXP Semiconductors vs. Forsys Metals Corp |
| Hua Hong vs. Datadog | Hua Hong vs. MICRONIC MYDATA | Hua Hong vs. DETALION GAMES SA | Hua Hong vs. HOCHSCHILD MINING |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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