Correlation Between Ingenic Semiconductor and Leaguer Shenzhen

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

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

Diversification Opportunities for Ingenic Semiconductor and Leaguer Shenzhen

0.89

Correlation Coefficient

Ingenic Semiconductor  Leaguer Shenzhen

Very poor diversification

The 3 months correlation between Ingenic and Leaguer is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Leaguer Shenzhen MicroElectron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaguer Shenzhen Mic 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 Leaguer Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaguer Shenzhen Mic has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Leaguer Shenzhen go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Leaguer Shenzhen

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to under-perform the Leaguer Shenzhen. In addition to that, Ingenic Semiconductor is 1.11 times more volatile than Leaguer Shenzhen MicroElectronics. It trades about -0.08 of its total potential returns per unit of risk. Leaguer Shenzhen MicroElectronics is currently generating about -0.05 per unit of volatility. If you would invest  3,064  in Leaguer Shenzhen MicroElectronics on October 5, 2024 and sell it today you would lose (384.00) from holding Leaguer Shenzhen MicroElectronics or give up 12.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Ingenic Semiconductor  vs.  Leaguer Shenzhen MicroElectron

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.

Leaguer Shenzhen Mic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leaguer Shenzhen MicroElectronics 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.

Pair Trading with Ingenic Semiconductor and Leaguer Shenzhen

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

The idea behind Ingenic Semiconductor and Leaguer Shenzhen MicroElectronics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.