Correlation Between Ingenic Semiconductor and Suzhou Oriental

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

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

Diversification Opportunities for Ingenic Semiconductor and Suzhou Oriental

0.85

Correlation Coefficient

Ingenic Semiconductor  Suzhou Oriental

Very poor diversification

The 3 months correlation between Ingenic and Suzhou is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Suzhou Oriental Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Oriental Semi 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 Suzhou Oriental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Oriental Semi has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Suzhou Oriental go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Suzhou Oriental

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to generate 1.04 times more return on investment than Suzhou Oriental. However, Ingenic Semiconductor is 1.04 times more volatile than Suzhou Oriental Semiconductor. It trades about -0.1 of its potential returns per unit of risk. Suzhou Oriental Semiconductor is currently generating about -0.16 per unit of risk. If you would invest  7,247  in Ingenic Semiconductor on October 6, 2024 and sell it today you would lose (1,070) from holding Ingenic Semiconductor or give up 14.76% 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.  Suzhou Oriental Semiconductor

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Suzhou Oriental Semi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suzhou Oriental Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ingenic Semiconductor and Suzhou Oriental

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

The idea behind Ingenic Semiconductor and Suzhou Oriental Semiconductor 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.