Correlation Between China Publishing and Thinkon Semiconductor

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

By analyzing existing cross correlation between China Publishing Media and Thinkon Semiconductor Jinzhou, you can compare the effects of market volatilities on China Publishing and Thinkon 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 China Publishing with a short position of Thinkon Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Publishing and Thinkon Semiconductor.

Diversification Opportunities for China Publishing and Thinkon Semiconductor

0.64

Correlation Coefficient

China Publishing  Thinkon Semiconductor

Poor diversification

The 3 months correlation between China and Thinkon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding China Publishing Media and Thinkon Semiconductor Jinzhou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinkon Semiconductor and China Publishing 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 China Publishing Media are associated (or correlated) with Thinkon Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinkon Semiconductor has no effect on the direction of China Publishing i.e., China Publishing and Thinkon Semiconductor go up and down completely randomly.

Pair Corralation between China Publishing and Thinkon Semiconductor

Assuming the 90 days trading horizon China Publishing is expected to generate 1.21 times less return on investment than Thinkon Semiconductor. But when comparing it to its historical volatility, China Publishing Media is 1.0 times less risky than Thinkon Semiconductor. It trades about 0.02 of its potential returns per unit of risk. Thinkon Semiconductor Jinzhou is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,322  in Thinkon Semiconductor Jinzhou on October 21, 2024 and sell it today you would earn a total of  21.00  from holding Thinkon Semiconductor Jinzhou or generate 0.9% return on investment over 90 days.

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

China Publishing Media  vs.  Thinkon Semiconductor Jinzhou

China Publishing Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Publishing Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, China Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thinkon Semiconductor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thinkon Semiconductor Jinzhou are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Thinkon Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Publishing and Thinkon Semiconductor

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

The idea behind China Publishing Media and Thinkon Semiconductor Jinzhou 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.