Correlation Between Contemporary Amperex and GRINM Semiconductor

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

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

Diversification Opportunities for Contemporary Amperex and GRINM Semiconductor

0.97

Correlation Coefficient

Contemporary Amperex  GRINM Semiconductor

Almost no diversification

The 3 months correlation between Contemporary and GRINM is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and GRINM Semiconductor Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRINM Semiconductor and Contemporary Amperex 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 Contemporary Amperex Technology are associated (or correlated) with GRINM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GRINM Semiconductor has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and GRINM Semiconductor go up and down completely randomly.

Pair Corralation between Contemporary Amperex and GRINM Semiconductor

Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to generate 0.94 times more return on investment than GRINM Semiconductor. However, Contemporary Amperex Technology is 1.06 times less risky than GRINM Semiconductor. It trades about 0.17 of its potential returns per unit of risk. GRINM Semiconductor Materials is currently generating about 0.15 per unit of risk. If you would invest  18,350  in Contemporary Amperex Technology on September 13, 2024 and sell it today you would earn a total of  8,360  from holding Contemporary Amperex Technology or generate 45.56% return on investment over 90 days.

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

Contemporary Amperex Technolog  vs.  GRINM Semiconductor Materials

Contemporary Amperex

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Contemporary Amperex Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Contemporary Amperex sustained solid returns over the last few months and may actually be approaching a breakup point.

GRINM Semiconductor

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GRINM Semiconductor Materials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GRINM Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Contemporary Amperex and GRINM Semiconductor

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

The idea behind Contemporary Amperex Technology and GRINM Semiconductor Materials 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.