Correlation Between BURLINGTON STORES and Hua Hong

Can any of the company-specific risk be diversified away by investing in both BURLINGTON STORES and Hua Hong 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 BURLINGTON STORES and Hua Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BURLINGTON STORES and Hua Hong Semiconductor, you can compare the effects of market volatilities on BURLINGTON STORES and Hua Hong 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 BURLINGTON STORES with a short position of Hua Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of BURLINGTON STORES and Hua Hong.

Diversification Opportunities for BURLINGTON STORES and Hua Hong

-0.24

Correlation Coefficient

BURLINGTON STORES  Hua Hong

Very good diversification

The 3 months correlation between BURLINGTON and Hua is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and Hua Hong Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hua Hong Semiconductor and BURLINGTON STORES 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 BURLINGTON STORES are associated (or correlated) with Hua Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hua Hong Semiconductor has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and Hua Hong go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and Hua Hong

Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 0.71 times more return on investment than Hua Hong. However, BURLINGTON STORES is 1.42 times less risky than Hua Hong. It trades about 0.13 of its potential returns per unit of risk. Hua Hong Semiconductor is currently generating about -0.02 per unit of risk. If you would invest  18,800  in BURLINGTON STORES on April 22, 2025 and sell it today you would earn a total of  3,400  from holding BURLINGTON STORES or generate 18.09% return on investment over 90 days.

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

BURLINGTON STORES  vs.  Hua Hong Semiconductor

BURLINGTON STORES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BURLINGTON STORES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, BURLINGTON STORES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hua Hong Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hua Hong is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BURLINGTON STORES and Hua Hong

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

The idea behind BURLINGTON STORES and Hua Hong Semiconductor 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.