Correlation Between Ingenic Semiconductor and Jinsanjiang Silicon

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

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

Diversification Opportunities for Ingenic Semiconductor and Jinsanjiang Silicon

0.63

Correlation Coefficient

Ingenic Semiconductor  Jinsanjiang Silicon

Poor diversification

The 3 months correlation between Ingenic and Jinsanjiang is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Jinsanjiang Silicon Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinsanjiang Silicon 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 Jinsanjiang Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinsanjiang Silicon has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Jinsanjiang Silicon go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Jinsanjiang Silicon

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to under-perform the Jinsanjiang Silicon. But the stock apears to be less risky and, when comparing its historical volatility, Ingenic Semiconductor is 1.08 times less risky than Jinsanjiang Silicon. The stock trades about -0.01 of its potential returns per unit of risk. The Jinsanjiang Silicon Material is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,397  in Jinsanjiang Silicon Material on October 4, 2024 and sell it today you would lose (167.00) from holding Jinsanjiang Silicon Material or give up 11.95% of portfolio value over 90 days.

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

Ingenic Semiconductor  vs.  Jinsanjiang Silicon Material

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.

Jinsanjiang Silicon

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jinsanjiang Silicon Material are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Jinsanjiang Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ingenic Semiconductor and Jinsanjiang Silicon

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

The idea behind Ingenic Semiconductor and Jinsanjiang Silicon Material 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.