Correlation Between Guangzhou KingTeller and Semiconductor Manufacturing

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

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

Diversification Opportunities for Guangzhou KingTeller and Semiconductor Manufacturing

0.91

Correlation Coefficient

Guangzhou KingTeller  Semiconductor Manufacturing

Almost no diversification

The 3 months correlation between Guangzhou and Semiconductor is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KingTeller Technolog and Semiconductor Manufacturing In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Guangzhou KingTeller 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 Guangzhou KingTeller Technology 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 Guangzhou KingTeller i.e., Guangzhou KingTeller and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Guangzhou KingTeller and Semiconductor Manufacturing

Assuming the 90 days trading horizon Guangzhou KingTeller is expected to generate 1.59 times less return on investment than Semiconductor Manufacturing. But when comparing it to its historical volatility, Guangzhou KingTeller Technology is 1.45 times less risky than Semiconductor Manufacturing. It trades about 0.2 of its potential returns per unit of risk. Semiconductor Manufacturing Intl is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,626  in Semiconductor Manufacturing Intl on September 3, 2024 and sell it today you would earn a total of  4,384  from holding Semiconductor Manufacturing Intl or generate 94.77% return on investment over 90 days.

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

Guangzhou KingTeller Technolog  vs.  Semiconductor Manufacturing In

Guangzhou KingTeller

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou KingTeller Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou KingTeller sustained solid returns over the last few months and may actually be approaching a breakup point.

Semiconductor Manufacturing

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Intl are ranked lower than 17 (%) 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 Guangzhou KingTeller and Semiconductor Manufacturing

The main advantage of trading using opposite Guangzhou KingTeller and Semiconductor Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou KingTeller 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 Guangzhou KingTeller Technology and Semiconductor Manufacturing Intl 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 Stocks Directory module to find actively traded stocks across global markets.