Correlation Between Minmetals Capital and Union Semiconductor

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

By analyzing existing cross correlation between Minmetals Capital Co and Union Semiconductor Co, you can compare the effects of market volatilities on Minmetals Capital and Union 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 Minmetals Capital with a short position of Union Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minmetals Capital and Union Semiconductor.

Diversification Opportunities for Minmetals Capital and Union Semiconductor

0.94

Correlation Coefficient

Minmetals Capital  Union Semiconductor

Almost no diversification

The 3 months correlation between Minmetals and Union is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Minmetals Capital Co and Union Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Semiconductor and Minmetals Capital 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 Minmetals Capital Co are associated (or correlated) with Union Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Semiconductor has no effect on the direction of Minmetals Capital i.e., Minmetals Capital and Union Semiconductor go up and down completely randomly.

Pair Corralation between Minmetals Capital and Union Semiconductor

Assuming the 90 days trading horizon Minmetals Capital Co is expected to under-perform the Union Semiconductor. In addition to that, Minmetals Capital is 1.42 times more volatile than Union Semiconductor Co. It trades about -0.23 of its total potential returns per unit of risk. Union Semiconductor Co is currently generating about -0.28 per unit of volatility. If you would invest  1,040  in Union Semiconductor Co on September 10, 2024 and sell it today you would lose (103.00) from holding Union Semiconductor Co or give up 9.9% of portfolio value over 90 days.

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

Minmetals Capital Co  vs.  Union Semiconductor Co

Minmetals Capital

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Minmetals Capital Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Minmetals Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Union Semiconductor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Union Semiconductor Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Union Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Minmetals Capital and Union Semiconductor

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

The idea behind Minmetals Capital Co and Union 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.