Correlation Between Shenwan Hongyuan and Giantec Semiconductor

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

By analyzing existing cross correlation between Shenwan Hongyuan Group and Giantec Semiconductor Corp, you can compare the effects of market volatilities on Shenwan Hongyuan and Giantec Semiconductor 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 Shenwan Hongyuan with a short position of Giantec Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenwan Hongyuan and Giantec Semiconductor.

Diversification Opportunities for Shenwan Hongyuan and Giantec Semiconductor

0.33

Correlation Coefficient

Shenwan Hongyuan  Giantec Semiconductor

Weak diversification

The 3 months correlation between Shenwan and Giantec is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shenwan Hongyuan Group and Giantec Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giantec Semiconductor and Shenwan Hongyuan 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 Shenwan Hongyuan Group are associated (or correlated) with Giantec Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giantec Semiconductor has no effect on the direction of Shenwan Hongyuan i.e., Shenwan Hongyuan and Giantec Semiconductor go up and down completely randomly.

Pair Corralation between Shenwan Hongyuan and Giantec Semiconductor

Assuming the 90 days trading horizon Shenwan Hongyuan Group is expected to under-perform the Giantec Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Shenwan Hongyuan Group is 2.19 times less risky than Giantec Semiconductor. The stock trades about -0.19 of its potential returns per unit of risk. The Giantec Semiconductor Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,488  in Giantec Semiconductor Corp on October 11, 2024 and sell it today you would earn a total of  152.00  from holding Giantec Semiconductor Corp or generate 2.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Shenwan Hongyuan Group  vs.  Giantec Semiconductor Corp

Shenwan Hongyuan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Giantec Semiconductor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Giantec Semiconductor Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Giantec Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenwan Hongyuan and Giantec Semiconductor

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

The idea behind Shenwan Hongyuan Group and Giantec Semiconductor Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.