Correlation Between Union Semiconductor and Pengxin International

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

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

Diversification Opportunities for Union Semiconductor and Pengxin International

0.84

Correlation Coefficient

Union Semiconductor  Pengxin International

Very poor diversification

The 3 months correlation between Union and Pengxin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Union Semiconductor Co and Pengxin International Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pengxin International and Union 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 Union Semiconductor Co are associated (or correlated) with Pengxin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pengxin International has no effect on the direction of Union Semiconductor i.e., Union Semiconductor and Pengxin International go up and down completely randomly.

Pair Corralation between Union Semiconductor and Pengxin International

Assuming the 90 days trading horizon Union Semiconductor is expected to generate 1.36 times less return on investment than Pengxin International. In addition to that, Union Semiconductor is 1.1 times more volatile than Pengxin International Mining. It trades about 0.16 of its total potential returns per unit of risk. Pengxin International Mining is currently generating about 0.23 per unit of volatility. If you would invest  209.00  in Pengxin International Mining on September 8, 2024 and sell it today you would earn a total of  132.00  from holding Pengxin International Mining or generate 63.16% return on investment over 90 days.

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

Union Semiconductor Co  vs.  Pengxin International Mining

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.

Pengxin International

Risk-Adjusted Performance

18 of 100

Solid

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

Pair Trading with Union Semiconductor and Pengxin International

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

The idea behind Union Semiconductor Co and Pengxin International Mining 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.