Correlation Between ABOV Semiconductor and IM CoLtd

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

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

Diversification Opportunities for ABOV Semiconductor and IM CoLtd

-0.78

Correlation Coefficient

ABOV Semiconductor  IM CoLtd

Pay attention - limited upside

The 3 months correlation between ABOV and 101390 is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ABOV Semiconductor Co and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd and ABOV 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 ABOV Semiconductor Co are associated (or correlated) with IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of ABOV Semiconductor i.e., ABOV Semiconductor and IM CoLtd go up and down completely randomly.

Pair Corralation between ABOV Semiconductor and IM CoLtd

Assuming the 90 days trading horizon ABOV Semiconductor Co is expected to generate 0.65 times more return on investment than IM CoLtd. However, ABOV Semiconductor Co is 1.53 times less risky than IM CoLtd. It trades about 0.18 of its potential returns per unit of risk. IM CoLtd is currently generating about -0.05 per unit of risk. If you would invest  769,668  in ABOV Semiconductor Co on December 24, 2024 and sell it today you would earn a total of  508,332  from holding ABOV Semiconductor Co or generate 66.05% return on investment over 90 days.

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

ABOV Semiconductor Co  vs.  IM CoLtd

ABOV Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABOV Semiconductor Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ABOV Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

IM CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days IM CoLtd 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with ABOV Semiconductor and IM CoLtd

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

The idea behind ABOV Semiconductor Co and IM 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.