Correlation Between Ingenic Semiconductor and Ningxia Building

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

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

Diversification Opportunities for Ingenic Semiconductor and Ningxia Building

0.36

Correlation Coefficient

Ingenic Semiconductor  Ningxia Building

Weak diversification

The 3 months correlation between Ingenic and Ningxia is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Ningxia Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Building Mat 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 Ningxia Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Building Mat has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Ningxia Building go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Ningxia Building

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to generate 5.52 times less return on investment than Ningxia Building. In addition to that, Ingenic Semiconductor is 1.33 times more volatile than Ningxia Building Materials. It trades about 0.0 of its total potential returns per unit of risk. Ningxia Building Materials is currently generating about 0.04 per unit of volatility. If you would invest  1,431  in Ningxia Building Materials on December 26, 2024 and sell it today you would earn a total of  53.00  from holding Ningxia Building Materials or generate 3.7% 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.  Ningxia Building Materials

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.

Ningxia Building Mat

Risk-Adjusted Performance

Weak

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

Pair Trading with Ingenic Semiconductor and Ningxia Building

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

The idea behind Ingenic Semiconductor and Ningxia Building 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.