Correlation Between Ingenic Semiconductor and Fujian Longzhou

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

By analyzing existing cross correlation between Ingenic Semiconductor and Fujian Longzhou Transportation, you can compare the effects of market volatilities on Ingenic Semiconductor and Fujian Longzhou 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 Fujian Longzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ingenic Semiconductor and Fujian Longzhou.

Diversification Opportunities for Ingenic Semiconductor and Fujian Longzhou

0.28

Correlation Coefficient

Ingenic Semiconductor  Fujian Longzhou

Modest diversification

The 3 months correlation between Ingenic and Fujian is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Fujian Longzhou Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Longzhou Tran 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 Fujian Longzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Longzhou Tran has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Fujian Longzhou go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Fujian Longzhou

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to generate 5.39 times less return on investment than Fujian Longzhou. In addition to that, Ingenic Semiconductor is 1.47 times more volatile than Fujian Longzhou Transportation. It trades about 0.02 of its total potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about 0.13 per unit of volatility. If you would invest  427.00  in Fujian Longzhou Transportation on December 25, 2024 and sell it today you would earn a total of  88.00  from holding Fujian Longzhou Transportation or generate 20.61% return on investment over 90 days.

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

Ingenic Semiconductor  vs.  Fujian Longzhou Transportation

Ingenic Semiconductor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ingenic Semiconductor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Fujian Longzhou Tran

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Longzhou Transportation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Longzhou sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingenic Semiconductor and Fujian Longzhou

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

The idea behind Ingenic Semiconductor and Fujian Longzhou Transportation 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 Transaction History module to view history of all your transactions and understand their impact on performance.