Correlation Between 360 Security and StarPower Semiconductor

Can any of the company-specific risk be diversified away by investing in both 360 Security and StarPower 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 360 Security and StarPower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 360 Security Technology and StarPower Semiconductor, you can compare the effects of market volatilities on 360 Security and StarPower 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 360 Security with a short position of StarPower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Security and StarPower Semiconductor.

Diversification Opportunities for 360 Security and StarPower Semiconductor

0.4

Correlation Coefficient

360 Security  StarPower Semiconductor

Very weak diversification

The 3 months correlation between 360 and StarPower is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding 360 Security Technology and StarPower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StarPower Semiconductor and 360 Security 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 360 Security Technology are associated (or correlated) with StarPower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StarPower Semiconductor has no effect on the direction of 360 Security i.e., 360 Security and StarPower Semiconductor go up and down completely randomly.

Pair Corralation between 360 Security and StarPower Semiconductor

Assuming the 90 days trading horizon 360 Security Technology is expected to generate 1.09 times more return on investment than StarPower Semiconductor. However, 360 Security is 1.09 times more volatile than StarPower Semiconductor. It trades about 0.01 of its potential returns per unit of risk. StarPower Semiconductor is currently generating about -0.06 per unit of risk. If you would invest  1,151  in 360 Security Technology on October 5, 2024 and sell it today you would lose (157.00) from holding 360 Security Technology or give up 13.64% of portfolio value over 90 days.

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

360 Security Technology  vs.  StarPower Semiconductor

360 Security Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 360 Security Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 360 Security may actually be approaching a critical reversion point that can send shares even higher in February 2025.

StarPower Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StarPower Semiconductor 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 360 Security and StarPower Semiconductor

The main advantage of trading using opposite 360 Security and StarPower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Security position performs unexpectedly, StarPower 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 StarPower Semiconductor will offset losses from the drop in StarPower Semiconductor's long position.

The idea behind 360 Security Technology and StarPower 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.