Correlation Between Hangzhou Guotai and Semiconductor Manufacturing

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

By analyzing existing cross correlation between Hangzhou Guotai Environmental and Semiconductor Manufacturing Electronics, you can compare the effects of market volatilities on Hangzhou Guotai 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 Hangzhou Guotai with a short position of Semiconductor Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hangzhou Guotai and Semiconductor Manufacturing.

Diversification Opportunities for Hangzhou Guotai and Semiconductor Manufacturing

0.78

Correlation Coefficient

Hangzhou Guotai  Semiconductor Manufacturing

Poor diversification

The 3 months correlation between Hangzhou and Semiconductor is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hangzhou Guotai Environmental and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Hangzhou Guotai 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 Hangzhou Guotai Environmental 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 Hangzhou Guotai i.e., Hangzhou Guotai and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Hangzhou Guotai and Semiconductor Manufacturing

Assuming the 90 days trading horizon Hangzhou Guotai is expected to generate 3.52 times less return on investment than Semiconductor Manufacturing. In addition to that, Hangzhou Guotai is 1.46 times more volatile than Semiconductor Manufacturing Electronics. It trades about 0.0 of its total potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently generating about 0.0 per unit of volatility. If you would invest  569.00  in Semiconductor Manufacturing Electronics on September 28, 2024 and sell it today you would lose (40.00) from holding Semiconductor Manufacturing Electronics or give up 7.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.26%
Values	Daily Returns

Hangzhou Guotai Environmental  vs.  Semiconductor Manufacturing El

Hangzhou Guotai Envi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hangzhou Guotai Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hangzhou Guotai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Semiconductor Manufacturing

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Manufacturing Electronics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Semiconductor Manufacturing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hangzhou Guotai and Semiconductor Manufacturing

The main advantage of trading using opposite Hangzhou Guotai and Semiconductor Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hangzhou Guotai 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 Hangzhou Guotai Environmental and Semiconductor Manufacturing Electronics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.