Correlation Between Kworld Computer and Sinopower Semiconductor

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

By analyzing existing cross correlation between Kworld Computer Co and Sinopower Semiconductor, you can compare the effects of market volatilities on Kworld Computer and Sinopower 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 Kworld Computer with a short position of Sinopower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kworld Computer and Sinopower Semiconductor.

Diversification Opportunities for Kworld Computer and Sinopower Semiconductor

0.84

Correlation Coefficient

Kworld Computer  Sinopower Semiconductor

Very poor diversification

The 3 months correlation between Kworld and Sinopower is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kworld Computer Co and Sinopower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopower Semiconductor and Kworld Computer 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 Kworld Computer Co are associated (or correlated) with Sinopower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopower Semiconductor has no effect on the direction of Kworld Computer i.e., Kworld Computer and Sinopower Semiconductor go up and down completely randomly.

Pair Corralation between Kworld Computer and Sinopower Semiconductor

Assuming the 90 days trading horizon Kworld Computer Co is expected to under-perform the Sinopower Semiconductor. In addition to that, Kworld Computer is 1.49 times more volatile than Sinopower Semiconductor. It trades about -0.16 of its total potential returns per unit of risk. Sinopower Semiconductor is currently generating about -0.15 per unit of volatility. If you would invest  10,450  in Sinopower Semiconductor on October 20, 2024 and sell it today you would lose (1,420) from holding Sinopower Semiconductor or give up 13.59% of portfolio value over 90 days.

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

Kworld Computer Co  vs.  Sinopower Semiconductor

Kworld Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kworld Computer Co 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.

Sinopower Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinopower Semiconductor 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.

Pair Trading with Kworld Computer and Sinopower Semiconductor

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

The idea behind Kworld Computer Co and Sinopower Semiconductor 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.