Correlation Between Suofeiya Home and Semiconductor Manufacturing

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

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

Diversification Opportunities for Suofeiya Home and Semiconductor Manufacturing

0.26

Correlation Coefficient

Suofeiya Home  Semiconductor Manufacturing

Modest diversification

The 3 months correlation between Suofeiya and Semiconductor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Suofeiya Home Collection and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Suofeiya Home 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 Suofeiya Home Collection 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 Suofeiya Home i.e., Suofeiya Home and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Suofeiya Home and Semiconductor Manufacturing

Assuming the 90 days trading horizon Suofeiya Home Collection is expected to generate 0.88 times more return on investment than Semiconductor Manufacturing. However, Suofeiya Home Collection is 1.13 times less risky than Semiconductor Manufacturing. It trades about -0.33 of its potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about -0.34 per unit of risk. If you would invest  1,723  in Suofeiya Home Collection on October 20, 2024 and sell it today you would lose (216.00) from holding Suofeiya Home Collection or give up 12.54% of portfolio value over 90 days.

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

Suofeiya Home Collection  vs.  Semiconductor Manufacturing El

Suofeiya Home Collection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suofeiya Home Collection 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Semiconductor Manufacturing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Semiconductor Manufacturing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Suofeiya Home and Semiconductor Manufacturing

The main advantage of trading using opposite Suofeiya Home and Semiconductor Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suofeiya Home 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 Suofeiya Home Collection 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.