Correlation Between Semiconductor Manufacturing and AVIC Fund

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

Diversification Opportunities for Semiconductor Manufacturing and AVIC Fund

0.7

Correlation Coefficient

Semiconductor Manufacturing  AVIC Fund

Poor diversification

The 3 months correlation between Semiconductor and AVIC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Manufacturing El and AVIC Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIC 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 AVIC Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIC Fund Management has no effect on the direction of Semiconductor Manufacturing i.e., Semiconductor Manufacturing and AVIC Fund go up and down completely randomly.

Pair Corralation between Semiconductor Manufacturing and AVIC Fund

Assuming the 90 days trading horizon Semiconductor Manufacturing Electronics is expected to generate 11.41 times more return on investment than AVIC Fund. However, Semiconductor Manufacturing is 11.41 times more volatile than AVIC Fund Management. It trades about 0.25 of its potential returns per unit of risk. AVIC Fund Management is currently generating about 0.16 per unit of risk. If you would invest  338.00  in Semiconductor Manufacturing Electronics on September 12, 2024 and sell it today you would earn a total of  254.00  from holding Semiconductor Manufacturing Electronics or generate 75.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Semiconductor Manufacturing El  vs.  AVIC Fund Management

Semiconductor Manufacturing

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 19 (%) 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.

AVIC Fund Management

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AVIC Fund Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AVIC 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 AVIC Fund

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

The idea behind Semiconductor Manufacturing Electronics and AVIC 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.