Correlation Between Semiconductor Manufacturing and Huaxia Fund

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

By analyzing existing cross correlation between Semiconductor Manufacturing Electronics and Huaxia Fund Management, you can compare the effects of market volatilities on Semiconductor Manufacturing and Huaxia Fund 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 Huaxia Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Manufacturing and Huaxia Fund.

Diversification Opportunities for Semiconductor Manufacturing and Huaxia Fund

-0.64

Correlation Coefficient

Semiconductor Manufacturing  Huaxia Fund

Excellent diversification

The 3 months correlation between Semiconductor and Huaxia is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and Huaxia Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaxia Fund Management 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 Huaxia Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaxia Fund Management has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and Huaxia Fund go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and Huaxia Fund

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 4.73 times more return on investment than Huaxia Fund. However, Semiconductor Manufacturing is 4.73 times more volatile than Huaxia Fund Management. It trades about 0.24 of its potential returns per unit of risk. Huaxia Fund Management is currently generating about -0.07 per unit of risk. If you would invest  354.00  in Semiconductor Manufacturing Electronics on September 4, 2024 and sell it today you would earn a total of  246.00  from holding Semiconductor Manufacturing Electronics or generate 69.49% return on investment over 90 days.

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

Semiconductor Manufacturing El  vs.  Huaxia Fund Management

Semiconductor Manufacturing

Risk-Adjusted Performance

18 of 100

Solid

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

Huaxia Fund Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaxia Fund Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Huaxia Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semiconductor Manufacturing and Huaxia Fund

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

The idea behind Semiconductor Manufacturing Electronics and Huaxia Fund Management 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.