Correlation Between Ingenic Semiconductor and Semiconductor Manufacturing

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

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

Diversification Opportunities for Ingenic Semiconductor and Semiconductor Manufacturing

0.26

Correlation Coefficient

Ingenic Semiconductor  Semiconductor Manufacturing

Modest diversification

The 3 months correlation between Ingenic and Semiconductor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ingenic Semiconductor and Semiconductor Manufacturing In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing 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 Semiconductor Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Manufacturing has no effect on the direction of Ingenic Semiconductor i.e., Ingenic Semiconductor and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Ingenic Semiconductor and Semiconductor Manufacturing

Assuming the 90 days trading horizon Ingenic Semiconductor is expected to under-perform the Semiconductor Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, Ingenic Semiconductor is 1.07 times less risky than Semiconductor Manufacturing. The stock trades about -0.04 of its potential returns per unit of risk. The Semiconductor Manufacturing Intl is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,370  in Semiconductor Manufacturing Intl on October 25, 2024 and sell it today you would earn a total of  654.00  from holding Semiconductor Manufacturing Intl or generate 6.98% 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.  Semiconductor Manufacturing In

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.

Semiconductor Manufacturing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Intl are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Semiconductor Manufacturing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ingenic Semiconductor and Semiconductor Manufacturing

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

The idea behind Ingenic Semiconductor and Semiconductor Manufacturing Intl 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 Transaction History module to view history of all your transactions and understand their impact on performance.