Correlation Between Union Semiconductor and Anji Foodstuff

Can any of the company-specific risk be diversified away by investing in both Union Semiconductor and Anji Foodstuff 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 Anji Foodstuff 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 Anji Foodstuff Co, you can compare the effects of market volatilities on Union Semiconductor and Anji Foodstuff 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 Anji Foodstuff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Semiconductor and Anji Foodstuff.

Diversification Opportunities for Union Semiconductor and Anji Foodstuff

0.53

Correlation Coefficient

Union Semiconductor  Anji Foodstuff

Very weak diversification

The 3 months correlation between Union and Anji is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Union Semiconductor Co and Anji Foodstuff Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anji Foodstuff 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 Anji Foodstuff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anji Foodstuff has no effect on the direction of Union Semiconductor i.e., Union Semiconductor and Anji Foodstuff go up and down completely randomly.

Pair Corralation between Union Semiconductor and Anji Foodstuff

Assuming the 90 days trading horizon Union Semiconductor Co is expected to generate 1.14 times more return on investment than Anji Foodstuff. However, Union Semiconductor is 1.14 times more volatile than Anji Foodstuff Co. It trades about 0.13 of its potential returns per unit of risk. Anji Foodstuff Co is currently generating about 0.11 per unit of risk. If you would invest  708.00  in Union Semiconductor Co on September 26, 2024 and sell it today you would earn a total of  233.00  from holding Union Semiconductor Co or generate 32.91% return on investment over 90 days.

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

Union Semiconductor Co  vs.  Anji Foodstuff Co

Union Semiconductor

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Union Semiconductor Co are ranked lower than 10 (%) 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.

Anji Foodstuff

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Anji Foodstuff Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anji Foodstuff sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Union Semiconductor and Anji Foodstuff

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

The idea behind Union Semiconductor Co and Anji Foodstuff 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.