Correlation Between Orient Semiconductor and Elite Semiconductor

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

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

Diversification Opportunities for Orient Semiconductor and Elite Semiconductor

0.92

Correlation Coefficient

Orient Semiconductor  Elite Semiconductor

Almost no diversification

The 3 months correlation between Orient and Elite is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Orient Semiconductor Electroni and Elite Semiconductor Memory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Semiconductor and Orient 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 Orient Semiconductor Electronics are associated (or correlated) with Elite Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Semiconductor has no effect on the direction of Orient Semiconductor i.e., Orient Semiconductor and Elite Semiconductor go up and down completely randomly.

Pair Corralation between Orient Semiconductor and Elite Semiconductor

Assuming the 90 days trading horizon Orient Semiconductor Electronics is expected to generate 1.04 times more return on investment than Elite Semiconductor. However, Orient Semiconductor is 1.04 times more volatile than Elite Semiconductor Memory. It trades about 0.03 of its potential returns per unit of risk. Elite Semiconductor Memory is currently generating about 0.02 per unit of risk. If you would invest  3,525  in Orient Semiconductor Electronics on December 27, 2024 and sell it today you would earn a total of  95.00  from holding Orient Semiconductor Electronics or generate 2.7% return on investment over 90 days.

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

Orient Semiconductor Electroni  vs.  Elite Semiconductor Memory

Orient Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Semiconductor Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Orient Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Elite Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elite Semiconductor Memory are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Elite Semiconductor is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Orient Semiconductor and Elite Semiconductor

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

The idea behind Orient Semiconductor Electronics and Elite Semiconductor Memory 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.