Correlation Between Industrial and GRINM Semiconductor

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

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

Diversification Opportunities for Industrial and GRINM Semiconductor

-0.36

Correlation Coefficient

Industrial  GRINM Semiconductor

Very good diversification

The 3 months correlation between Industrial and GRINM is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and GRINM Semiconductor Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GRINM Semiconductor and Industrial 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 Industrial and Commercial 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 Industrial i.e., Industrial and GRINM Semiconductor go up and down completely randomly.

Pair Corralation between Industrial and GRINM Semiconductor

Assuming the 90 days trading horizon Industrial and Commercial is expected to generate 0.41 times more return on investment than GRINM Semiconductor. However, Industrial and Commercial is 2.44 times less risky than GRINM Semiconductor. It trades about 0.1 of its potential returns per unit of risk. GRINM Semiconductor Materials is currently generating about -0.02 per unit of risk. If you would invest  403.00  in Industrial and Commercial on October 6, 2024 and sell it today you would earn a total of  268.00  from holding Industrial and Commercial or generate 66.5% return on investment over 90 days.

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

Industrial and Commercial  vs.  GRINM Semiconductor Materials

Industrial and Commercial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Industrial and GRINM Semiconductor

The main advantage of trading using opposite Industrial and GRINM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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 Industrial and Commercial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.