Correlation Between Shuhua Sports and Ingenic Semiconductor

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

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

Diversification Opportunities for Shuhua Sports and Ingenic Semiconductor

0.55

Correlation Coefficient

Shuhua Sports  Ingenic Semiconductor

Very weak diversification

The 3 months correlation between Shuhua and Ingenic is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shuhua Sports Co and Ingenic Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingenic Semiconductor and Shuhua Sports 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 Shuhua Sports Co are associated (or correlated) with Ingenic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingenic Semiconductor has no effect on the direction of Shuhua Sports i.e., Shuhua Sports and Ingenic Semiconductor go up and down completely randomly.

Pair Corralation between Shuhua Sports and Ingenic Semiconductor

Assuming the 90 days trading horizon Shuhua Sports Co is expected to generate 0.88 times more return on investment than Ingenic Semiconductor. However, Shuhua Sports Co is 1.13 times less risky than Ingenic Semiconductor. It trades about 0.08 of its potential returns per unit of risk. Ingenic Semiconductor is currently generating about 0.0 per unit of risk. If you would invest  789.00  in Shuhua Sports Co on December 26, 2024 and sell it today you would earn a total of  105.00  from holding Shuhua Sports Co or generate 13.31% return on investment over 90 days.

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

Shuhua Sports Co  vs.  Ingenic Semiconductor

Shuhua Sports

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shuhua Sports Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shuhua Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Ingenic Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ingenic Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ingenic 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 Shuhua Sports and Ingenic Semiconductor

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

The idea behind Shuhua Sports Co and Ingenic 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.