Correlation Between Ingenic Semiconductor and Daoming OpticsChemical

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

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

Diversification Opportunities for Ingenic Semiconductor and Daoming OpticsChemical

0.81

Correlation Coefficient

Ingenic Semiconductor  Daoming OpticsChemical

Very poor diversification

The 3 months correlation between Ingenic and Daoming is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Daoming OpticsChemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daoming OpticsChemical and Ingenic 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 Ingenic Semiconductor are associated (or correlated) with Daoming OpticsChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daoming OpticsChemical has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Daoming OpticsChemical go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Daoming OpticsChemical

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to generate 1.33 times more return on investment than Daoming OpticsChemical. However, Ingenic Semiconductor is 1.33 times more volatile than Daoming OpticsChemical Co. It trades about 0.01 of its potential returns per unit of risk. Daoming OpticsChemical Co is currently generating about -0.01 per unit of risk. If you would invest  7,475  in Ingenic Semiconductor on December 26, 2024 and sell it today you would lose (221.00) from holding Ingenic Semiconductor or give up 2.96% of portfolio value over 90 days.

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

Ingenic Semiconductor  vs.  Daoming OpticsChemical Co

Ingenic Semiconductor

Risk-Adjusted Performance

Very 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.

Daoming OpticsChemical

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ingenic Semiconductor and Daoming OpticsChemical

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

The idea behind Ingenic Semiconductor and Daoming OpticsChemical Co 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.