Correlation Between Anhui Gujing and Semiconductor Manufacturing

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

By analyzing existing cross correlation between Anhui Gujing Distillery and Semiconductor Manufacturing Electronics, you can compare the effects of market volatilities on Anhui Gujing and Semiconductor Manufacturing 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 Anhui Gujing with a short position of Semiconductor Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Gujing and Semiconductor Manufacturing.

Diversification Opportunities for Anhui Gujing and Semiconductor Manufacturing

0.45

Correlation Coefficient

Anhui Gujing  Semiconductor Manufacturing

Very weak diversification

The 3 months correlation between Anhui and Semiconductor is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Gujing Distillery and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Anhui Gujing 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 Anhui Gujing Distillery are associated (or correlated) with Semiconductor Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Manufacturing has no effect on the direction of Anhui Gujing i.e., Anhui Gujing and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Anhui Gujing and Semiconductor Manufacturing

Assuming the 90 days trading horizon Anhui Gujing Distillery is expected to under-perform the Semiconductor Manufacturing. In addition to that, Anhui Gujing is 1.03 times more volatile than Semiconductor Manufacturing Electronics. It trades about -0.03 of its total potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about 0.09 per unit of volatility. If you would invest  394.00  in Semiconductor Manufacturing Electronics on September 30, 2024 and sell it today you would earn a total of  135.00  from holding Semiconductor Manufacturing Electronics or generate 34.26% return on investment over 90 days.

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

Anhui Gujing Distillery  vs.  Semiconductor Manufacturing El

Anhui Gujing Distillery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anhui Gujing Distillery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Semiconductor Manufacturing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 8 (%) 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.

Pair Trading with Anhui Gujing and Semiconductor Manufacturing

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

The idea behind Anhui Gujing Distillery and Semiconductor Manufacturing Electronics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.