Correlation Between Shannon Semiconductor and Jinling Hotel

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

By analyzing existing cross correlation between Shannon Semiconductor Technology and Jinling Hotel Corp, you can compare the effects of market volatilities on Shannon Semiconductor and Jinling Hotel 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 Shannon Semiconductor with a short position of Jinling Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shannon Semiconductor and Jinling Hotel.

Diversification Opportunities for Shannon Semiconductor and Jinling Hotel

0.12

Correlation Coefficient

Shannon Semiconductor  Jinling Hotel

Average diversification

The 3 months correlation between Shannon and Jinling is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shannon Semiconductor Technolo and Jinling Hotel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinling Hotel Corp and Shannon 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 Shannon Semiconductor Technology are associated (or correlated) with Jinling Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinling Hotel Corp has no effect on the direction of Shannon Semiconductor i.e., Shannon Semiconductor and Jinling Hotel go up and down completely randomly.

Pair Corralation between Shannon Semiconductor and Jinling Hotel

Assuming the 90 days trading horizon Shannon Semiconductor Technology is expected to generate 2.48 times more return on investment than Jinling Hotel. However, Shannon Semiconductor is 2.48 times more volatile than Jinling Hotel Corp. It trades about 0.1 of its potential returns per unit of risk. Jinling Hotel Corp is currently generating about 0.02 per unit of risk. If you would invest  3,016  in Shannon Semiconductor Technology on December 26, 2024 and sell it today you would earn a total of  646.00  from holding Shannon Semiconductor Technology or generate 21.42% return on investment over 90 days.

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

Shannon Semiconductor Technolo  vs.  Jinling Hotel Corp

Shannon Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shannon Semiconductor Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shannon Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Jinling Hotel Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jinling Hotel Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jinling Hotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shannon Semiconductor and Jinling Hotel

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

The idea behind Shannon Semiconductor Technology and Jinling Hotel Corp 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.