Correlation Between Great Sun and Semiconductor Manufacturing

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

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

Diversification Opportunities for Great Sun and Semiconductor Manufacturing

0.74

Correlation Coefficient

Great Sun  Semiconductor Manufacturing

Poor diversification

The 3 months correlation between Great and Semiconductor is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Great Sun Foods Co and Semiconductor Manufacturing El in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing and Great Sun 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 Great Sun Foods Co are associated (or correlated) with Semiconductor Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Manufacturing has no effect on the direction of Great Sun i.e., Great Sun and Semiconductor Manufacturing go up and down completely randomly.

Pair Corralation between Great Sun and Semiconductor Manufacturing

Assuming the 90 days trading horizon Great Sun Foods Co is expected to generate about the same return on investment as Semiconductor Manufacturing Electronics. However, Great Sun is 1.39 times more volatile than Semiconductor Manufacturing Electronics. It trades about 0.0 of its potential returns per unit of risk. Semiconductor Manufacturing Electronics is currently producing about 0.0 per unit of risk. If you would invest  538.00  in Semiconductor Manufacturing Electronics on October 5, 2024 and sell it today you would lose (60.00) from holding Semiconductor Manufacturing Electronics or give up 11.15% of portfolio value over 90 days.

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

Great Sun Foods Co  vs.  Semiconductor Manufacturing El

Great Sun Foods

Risk-Adjusted Performance

2 of 100

Weak

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

Semiconductor Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Great Sun and Semiconductor Manufacturing

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

The idea behind Great Sun Foods Co and Semiconductor Manufacturing Electronics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.