Correlation Between ITM Semiconductor and Cheryong Electric

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

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

Diversification Opportunities for ITM Semiconductor and Cheryong Electric

0.34

Correlation Coefficient

ITM Semiconductor  Cheryong Electric

Weak diversification

The 3 months correlation between ITM and Cheryong is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding ITM Semiconductor Co and Cheryong Electric CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Electric CoLtd and ITM Semiconductor 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 ITM Semiconductor Co are associated (or correlated) with Cheryong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Electric CoLtd has no effect on the direction of ITM Semiconductor i.e., ITM Semiconductor and Cheryong Electric go up and down completely randomly.

Pair Corralation between ITM Semiconductor and Cheryong Electric

Assuming the 90 days trading horizon ITM Semiconductor Co is expected to under-perform the Cheryong Electric. But the stock apears to be less risky and, when comparing its historical volatility, ITM Semiconductor Co is 1.52 times less risky than Cheryong Electric. The stock trades about -0.1 of its potential returns per unit of risk. The Cheryong Electric CoLtd is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,713,580  in Cheryong Electric CoLtd on October 26, 2024 and sell it today you would lose (1,793,580) from holding Cheryong Electric CoLtd or give up 23.25% of portfolio value over 90 days.

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

ITM Semiconductor Co  vs.  Cheryong Electric CoLtd

ITM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITM Semiconductor Co 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.

Cheryong Electric CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cheryong Electric CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cheryong Electric sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ITM Semiconductor and Cheryong Electric

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

The idea behind ITM Semiconductor Co and Cheryong Electric CoLtd 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.