Correlation Between Shenzhen Hifuture and Semiconductor Manufacturing

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

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

Diversification Opportunities for Shenzhen Hifuture and Semiconductor Manufacturing

0.51

Correlation Coefficient

Shenzhen Hifuture  Semiconductor Manufacturing

Very weak diversification

The 3 months correlation between Shenzhen and Semiconductor is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Hifuture Electric and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Shenzhen Hifuture 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 Shenzhen Hifuture Electric 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 Shenzhen Hifuture i.e., Shenzhen Hifuture and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Shenzhen Hifuture and Semiconductor Manufacturing

Assuming the 90 days trading horizon Shenzhen Hifuture is expected to generate 2.86 times less return on investment than Semiconductor Manufacturing. But when comparing it to its historical volatility, Shenzhen Hifuture Electric is 1.35 times less risky than Semiconductor Manufacturing. It trades about 0.12 of its potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  338.00  in Semiconductor Manufacturing Electronics on September 13, 2024 and sell it today you would earn a total of  250.00  from holding Semiconductor Manufacturing Electronics or generate 73.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Shenzhen Hifuture Electric  vs.  Semiconductor Manufacturing El

Shenzhen Hifuture

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen Hifuture Electric are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen Hifuture sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Shenzhen Hifuture and Semiconductor Manufacturing

The main advantage of trading using opposite Shenzhen Hifuture and Semiconductor Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Hifuture 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 Shenzhen Hifuture Electric 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.