Correlation Between Shantou Wanshun and Ingenic Semiconductor

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

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

Diversification Opportunities for Shantou Wanshun and Ingenic Semiconductor

0.75

Correlation Coefficient

Shantou Wanshun  Ingenic Semiconductor

Poor diversification

The 3 months correlation between Shantou and Ingenic is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shantou Wanshun Package and Ingenic Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingenic Semiconductor and Shantou Wanshun 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 Shantou Wanshun Package are associated (or correlated) with Ingenic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingenic Semiconductor has no effect on the direction of Shantou Wanshun i.e., Shantou Wanshun and Ingenic Semiconductor go up and down completely randomly.

Pair Corralation between Shantou Wanshun and Ingenic Semiconductor

Assuming the 90 days trading horizon Shantou Wanshun Package is expected to generate 0.96 times more return on investment than Ingenic Semiconductor. However, Shantou Wanshun Package is 1.04 times less risky than Ingenic Semiconductor. It trades about 0.04 of its potential returns per unit of risk. Ingenic Semiconductor is currently generating about 0.0 per unit of risk. If you would invest  493.00  in Shantou Wanshun Package on December 26, 2024 and sell it today you would earn a total of  22.00  from holding Shantou Wanshun Package or generate 4.46% return on investment over 90 days.

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

Shantou Wanshun Package  vs.  Ingenic Semiconductor

Shantou Wanshun Package

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shantou Wanshun Package are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shantou Wanshun may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ingenic Semiconductor

Risk-Adjusted Performance

Weak

Over the last 90 days Ingenic Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ingenic Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shantou Wanshun and Ingenic Semiconductor

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

The idea behind Shantou Wanshun Package and Ingenic Semiconductor 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.