Correlation Between Tibet Huayu and GRINM Semiconductor

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

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

Diversification Opportunities for Tibet Huayu and GRINM Semiconductor

0.6

Correlation Coefficient

Tibet Huayu  GRINM Semiconductor

Poor diversification

The 3 months correlation between Tibet and GRINM is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tibet Huayu Mining and GRINM Semiconductor Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRINM Semiconductor and Tibet Huayu 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 Tibet Huayu Mining 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 Tibet Huayu i.e., Tibet Huayu and GRINM Semiconductor go up and down completely randomly.

Pair Corralation between Tibet Huayu and GRINM Semiconductor

Assuming the 90 days trading horizon Tibet Huayu Mining is expected to generate 1.28 times more return on investment than GRINM Semiconductor. However, Tibet Huayu is 1.28 times more volatile than GRINM Semiconductor Materials. It trades about 0.07 of its potential returns per unit of risk. GRINM Semiconductor Materials is currently generating about 0.03 per unit of risk. If you would invest  832.00  in Tibet Huayu Mining on October 14, 2024 and sell it today you would earn a total of  371.00  from holding Tibet Huayu Mining or generate 44.59% return on investment over 90 days.

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

Tibet Huayu Mining  vs.  GRINM Semiconductor Materials

Tibet Huayu Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

GRINM Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GRINM Semiconductor Materials 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.

Pair Trading with Tibet Huayu and GRINM Semiconductor

The main advantage of trading using opposite Tibet Huayu and GRINM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tibet Huayu 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 Tibet Huayu Mining 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.