Correlation Between Elite Semiconductor and Hung Chou

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

By analyzing existing cross correlation between Elite Semiconductor Memory and Hung Chou Fiber, you can compare the effects of market volatilities on Elite Semiconductor and Hung Chou 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 Elite Semiconductor with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Semiconductor and Hung Chou.

Diversification Opportunities for Elite Semiconductor and Hung Chou

-0.79

Correlation Coefficient

Elite Semiconductor  Hung Chou

Pay attention - limited upside

The 3 months correlation between Elite and Hung is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Elite Semiconductor Memory and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and Elite 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 Elite Semiconductor Memory are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of Elite Semiconductor i.e., Elite Semiconductor and Hung Chou go up and down completely randomly.

Pair Corralation between Elite Semiconductor and Hung Chou

Assuming the 90 days trading horizon Elite Semiconductor Memory is expected to under-perform the Hung Chou. In addition to that, Elite Semiconductor is 1.21 times more volatile than Hung Chou Fiber. It trades about -0.1 of its total potential returns per unit of risk. Hung Chou Fiber is currently generating about 0.15 per unit of volatility. If you would invest  963.00  in Hung Chou Fiber on October 25, 2024 and sell it today you would earn a total of  157.00  from holding Hung Chou Fiber or generate 16.3% return on investment over 90 days.

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

Elite Semiconductor Memory  vs.  Hung Chou Fiber

Elite Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elite Semiconductor Memory has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Hung Chou Fiber

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hung Chou Fiber are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hung Chou showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elite Semiconductor and Hung Chou

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

The idea behind Elite Semiconductor Memory and Hung Chou Fiber 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.