Correlation Between Shannon Semiconductor and China Building

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Can any of the company-specific risk be diversified away by investing in both Shannon Semiconductor and China 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 Shannon Semiconductor and China Building 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 China Building Material, you can compare the effects of market volatilities on Shannon Semiconductor and China 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 Shannon Semiconductor with a short position of China Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shannon Semiconductor and China Building.

Diversification Opportunities for Shannon Semiconductor and China Building

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Shannon and China is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Shannon Semiconductor Technolo and China Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Building Material 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 China Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Building Material has no effect on the direction of Shannon Semiconductor i.e., Shannon Semiconductor and China Building go up and down completely randomly.

Pair Corralation between Shannon Semiconductor and China Building

Assuming the 90 days trading horizon Shannon Semiconductor Technology is expected to under-perform the China Building. In addition to that, Shannon Semiconductor is 1.18 times more volatile than China Building Material. It trades about -0.07 of its total potential returns per unit of risk. China Building Material is currently generating about 0.06 per unit of volatility. If you would invest  663.00  in China Building Material on October 23, 2024 and sell it today you would earn a total of  59.00  from holding China Building Material or generate 8.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Shannon Semiconductor Technolo  vs.  China Building Material

 Performance 
       Timeline  
Shannon Semiconductor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Shannon Semiconductor Technology 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.
China Building Material 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in China Building Material are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Building may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shannon Semiconductor and China Building Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shannon Semiconductor and China Building

The main advantage of trading using opposite Shannon Semiconductor and China Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shannon Semiconductor position performs unexpectedly, China 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 China Building will offset losses from the drop in China Building's long position.
The idea behind Shannon Semiconductor Technology and China Building Material 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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