Correlation Between Ingenic Semiconductor and Guangzhou Tinci

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

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

Diversification Opportunities for Ingenic Semiconductor and Guangzhou Tinci

0.46

Correlation Coefficient

Ingenic Semiconductor  Guangzhou Tinci

Very weak diversification

The 3 months correlation between Ingenic and Guangzhou is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Guangzhou Tinci Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Tinci Materials 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 Guangzhou Tinci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Tinci Materials has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Guangzhou Tinci go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Guangzhou Tinci

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to generate 1.03 times more return on investment than Guangzhou Tinci. However, Ingenic Semiconductor is 1.03 times more volatile than Guangzhou Tinci Materials. It trades about -0.01 of its potential returns per unit of risk. Guangzhou Tinci Materials is currently generating about -0.04 per unit of risk. If you would invest  9,427  in Ingenic Semiconductor on October 4, 2024 and sell it today you would lose (2,607) from holding Ingenic Semiconductor or give up 27.65% of portfolio value over 90 days.

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

Ingenic Semiconductor  vs.  Guangzhou Tinci Materials

Ingenic Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingenic Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Guangzhou Tinci Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guangzhou Tinci Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Tinci 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 Guangzhou Tinci

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

The idea behind Ingenic Semiconductor and Guangzhou Tinci Materials 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.